Correlation Between Alvotech and Hagar Hf

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

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

Diversification Opportunities for Alvotech and Hagar Hf

0.73

Correlation Coefficient

Alvotech  Hagar Hf

Poor diversification

The 3 months correlation between Alvotech and Hagar is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Hagar hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hagar 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 Hagar Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hagar hf has no effect on the direction of Alvotech i.e., Alvotech and Hagar Hf go up and down completely randomly.

Pair Corralation between Alvotech and Hagar Hf

Assuming the 90 days trading horizon Alvotech is expected to under-perform the Hagar Hf. In addition to that, Alvotech is 1.63 times more volatile than Hagar hf. It trades about -0.19 of its total potential returns per unit of risk. Hagar hf is currently generating about -0.05 per unit of volatility. If you would invest  10,600  in Hagar hf on December 30, 2024 and sell it today you would lose (600.00) from holding Hagar hf or give up 5.66% of portfolio value over 90 days.

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

Alvotech  vs.  Hagar hf

Alvotech

Risk-Adjusted Performance

Very Weak

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

Hagar hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hagar hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Hagar Hf is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alvotech and Hagar Hf

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

The idea behind Alvotech and Hagar 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.

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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.