Correlation Between Aluminum and Alvotech

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

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

Diversification Opportunities for Aluminum and Alvotech

0.27

Correlation Coefficient

Aluminum  Alvotech

Modest diversification

The 3 months correlation between Aluminum and Alvotech is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Aluminum 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 Aluminum of are associated (or correlated) with Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Aluminum i.e., Aluminum and Alvotech go up and down completely randomly.

Pair Corralation between Aluminum and Alvotech

Assuming the 90 days horizon Aluminum of is expected to under-perform the Alvotech. In addition to that, Aluminum is 2.97 times more volatile than Alvotech. It trades about -0.08 of its total potential returns per unit of risk. Alvotech is currently generating about 0.07 per unit of volatility. If you would invest  1,245  in Alvotech on October 11, 2024 and sell it today you would earn a total of  80.00  from holding Alvotech or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Aluminum of  vs.  Alvotech

Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Alvotech

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aluminum and Alvotech

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

The idea behind Aluminum of and Alvotech 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 Stocks Directory module to find actively traded stocks across global markets.