Correlation Between Alphatec Holdings and Orthofix Medical

Can any of the company-specific risk be diversified away by investing in both Alphatec Holdings and Orthofix Medical 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 Orthofix Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphatec Holdings and Orthofix Medical, you can compare the effects of market volatilities on Alphatec Holdings and Orthofix Medical 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 Orthofix Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphatec Holdings and Orthofix Medical.

Diversification Opportunities for Alphatec Holdings and Orthofix Medical

-0.34

Correlation Coefficient

Alphatec Holdings  Orthofix Medical

Very good diversification

The 3 months correlation between Alphatec and Orthofix is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alphatec Holdings and Orthofix Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orthofix Medical 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 Orthofix Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orthofix Medical has no effect on the direction of Alphatec Holdings i.e., Alphatec Holdings and Orthofix Medical go up and down completely randomly.

Pair Corralation between Alphatec Holdings and Orthofix Medical

Given the investment horizon of 90 days Alphatec Holdings is expected to generate 0.82 times more return on investment than Orthofix Medical. However, Alphatec Holdings is 1.22 times less risky than Orthofix Medical. It trades about 0.48 of its potential returns per unit of risk. Orthofix Medical is currently generating about -0.15 per unit of risk. If you would invest  991.00  in Alphatec Holdings on February 14, 2025 and sell it today you would earn a total of  301.00  from holding Alphatec Holdings or generate 30.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Alphatec Holdings  vs.  Orthofix Medical

Alphatec Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Orthofix Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orthofix Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alphatec Holdings and Orthofix Medical

The main advantage of trading using opposite Alphatec Holdings and Orthofix Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphatec Holdings position performs unexpectedly, Orthofix Medical 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 Orthofix Medical will offset losses from the drop in Orthofix Medical's long position.

The idea behind Alphatec Holdings and Orthofix Medical 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.