Correlation Between Alphatec Holdings and AngioDynamics

Can any of the company-specific risk be diversified away by investing in both Alphatec Holdings and AngioDynamics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alphatec Holdings and AngioDynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphatec Holdings and AngioDynamics, you can compare the effects of market volatilities on Alphatec Holdings and AngioDynamics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alphatec Holdings with a short position of AngioDynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphatec Holdings and AngioDynamics.

Diversification Opportunities for Alphatec Holdings and AngioDynamics

0.16

Correlation Coefficient

Alphatec Holdings  AngioDynamics

Average diversification

The 3 months correlation between Alphatec and AngioDynamics is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alphatec Holdings and AngioDynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngioDynamics and Alphatec Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alphatec Holdings are associated (or correlated) with AngioDynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngioDynamics has no effect on the direction of Alphatec Holdings i.e., Alphatec Holdings and AngioDynamics go up and down completely randomly.

Pair Corralation between Alphatec Holdings and AngioDynamics

Given the investment horizon of 90 days Alphatec Holdings is expected to under-perform the AngioDynamics. But the stock apears to be less risky and, when comparing its historical volatility, Alphatec Holdings is 1.95 times less risky than AngioDynamics. The stock trades about -0.1 of its potential returns per unit of risk. The AngioDynamics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  540.00  in AngioDynamics on January 26, 2024 and sell it today you would earn a total of  47.00  from holding AngioDynamics or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alphatec Holdings  vs.  AngioDynamics

Alphatec Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphatec Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AngioDynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AngioDynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, AngioDynamics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alphatec Holdings and AngioDynamics

The main advantage of trading using opposite Alphatec Holdings and AngioDynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphatec Holdings position performs unexpectedly, AngioDynamics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AngioDynamics will offset losses from the drop in AngioDynamics' long position.

The idea behind Alphatec Holdings and AngioDynamics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.