Correlation Between Alvotech and Oculis Holding

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

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

Diversification Opportunities for Alvotech and Oculis Holding

0.62

Correlation Coefficient

Alvotech  Oculis Holding

Poor diversification

The 3 months correlation between Alvotech and Oculis is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Oculis Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculis Holding AG 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 Oculis Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculis Holding AG has no effect on the direction of Alvotech i.e., Alvotech and Oculis Holding go up and down completely randomly.

Pair Corralation between Alvotech and Oculis Holding

Assuming the 90 days trading horizon Alvotech is expected to under-perform the Oculis Holding. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 1.13 times less risky than Oculis Holding. The stock trades about -0.19 of its potential returns per unit of risk. The Oculis Holding AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  238,000  in Oculis Holding AG on December 30, 2024 and sell it today you would earn a total of  12,000  from holding Oculis Holding AG or generate 5.04% return on investment over 90 days.

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

Alvotech  vs.  Oculis Holding AG

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.

Oculis Holding AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oculis Holding AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Oculis Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alvotech and Oculis Holding

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

The idea behind Alvotech and Oculis Holding AG 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 CEOs Directory module to screen CEOs from public companies around the world.