Correlation Between Alcon AG and Sharps Technology

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

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

Diversification Opportunities for Alcon AG and Sharps Technology

-0.32

Correlation Coefficient

Alcon AG  Sharps Technology

Very good diversification

The 3 months correlation between Alcon and Sharps is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alcon AG and Sharps Technology Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharps Technology Warrant and Alcon AG 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 Alcon AG are associated (or correlated) with Sharps Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharps Technology Warrant has no effect on the direction of Alcon AG i.e., Alcon AG and Sharps Technology go up and down completely randomly.

Pair Corralation between Alcon AG and Sharps Technology

Considering the 90-day investment horizon Alcon AG is expected to generate 14.15 times less return on investment than Sharps Technology. But when comparing it to its historical volatility, Alcon AG is 15.25 times less risky than Sharps Technology. It trades about 0.09 of its potential returns per unit of risk. Sharps Technology Warrant is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.27  in Sharps Technology Warrant on December 20, 2024 and sell it today you would lose (0.83) from holding Sharps Technology Warrant or give up 25.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Alcon AG  vs.  Sharps Technology Warrant

Alcon AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alcon AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Alcon AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sharps Technology Warrant

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sharps Technology Warrant are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sharps Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alcon AG and Sharps Technology

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

The idea behind Alcon AG and Sharps Technology Warrant 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.