Correlation Between Alvotech and Festi Hf

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

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

Diversification Opportunities for Alvotech and Festi Hf

0.5

Correlation Coefficient

Alvotech  Festi Hf

Very weak diversification

The 3 months correlation between Alvotech and Festi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Festi hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Festi hf and Alvotech 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 Alvotech are associated (or correlated) with Festi Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Festi hf has no effect on the direction of Alvotech i.e., Alvotech and Festi Hf go up and down completely randomly.

Pair Corralation between Alvotech and Festi Hf

Assuming the 90 days trading horizon Alvotech is expected to generate 16.78 times less return on investment than Festi Hf. But when comparing it to its historical volatility, Alvotech is 1.03 times less risky than Festi Hf. It trades about 0.02 of its potential returns per unit of risk. Festi hf is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  20,200  in Festi hf on September 5, 2024 and sell it today you would earn a total of  8,400  from holding Festi hf or generate 41.58% return on investment over 90 days.

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

Alvotech  vs.  Festi hf

Alvotech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Alvotech is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Festi hf

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Festi hf are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Festi Hf demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Festi Hf

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

The idea behind Alvotech and Festi hf 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.