Correlation Between Modular Medical and Align Technology

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

By analyzing existing cross correlation between Modular Medical and Align Technology, you can compare the effects of market volatilities on Modular Medical and Align Technology 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 Modular Medical with a short position of Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modular Medical and Align Technology.

Diversification Opportunities for Modular Medical and Align Technology

-0.6

Correlation Coefficient

Modular Medical  Align Technology

Excellent diversification

The 3 months correlation between Modular and Align is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Modular Medical and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and Modular Medical 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 Modular Medical are associated (or correlated) with Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Modular Medical i.e., Modular Medical and Align Technology go up and down completely randomly.

Pair Corralation between Modular Medical and Align Technology

Given the investment horizon of 90 days Modular Medical is expected to under-perform the Align Technology. In addition to that, Modular Medical is 2.14 times more volatile than Align Technology. It trades about -0.1 of its total potential returns per unit of risk. Align Technology is currently generating about 0.11 per unit of volatility. If you would invest  18,109  in Align Technology on April 28, 2025 and sell it today you would earn a total of  2,447  from holding Align Technology or generate 13.51% return on investment over 90 days.

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

Modular Medical  vs.  Align Technology

Modular Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Modular Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Align Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Align Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Modular Medical and Align Technology

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

The idea behind Modular Medical and Align Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.