Correlation Between Alvotech and Sminn Hf

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

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

Diversification Opportunities for Alvotech and Sminn Hf

0.03

Correlation Coefficient

Alvotech  Sminn Hf

Significant diversification

The 3 months correlation between Alvotech and Sminn is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Sminn hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sminn 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 Sminn Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sminn hf has no effect on the direction of Alvotech i.e., Alvotech and Sminn Hf go up and down completely randomly.

Pair Corralation between Alvotech and Sminn Hf

Assuming the 90 days trading horizon Alvotech is expected to generate 36.5 times less return on investment than Sminn Hf. In addition to that, Alvotech is 1.7 times more volatile than Sminn hf. It trades about 0.0 of its total potential returns per unit of risk. Sminn hf is currently generating about 0.09 per unit of volatility. If you would invest  1,330  in Sminn hf on December 2, 2024 and sell it today you would earn a total of  80.00  from holding Sminn hf or generate 6.02% return on investment over 90 days.

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

Alvotech  vs.  Sminn 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 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.

Sminn hf

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sminn hf are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent primary indicators, Sminn Hf may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alvotech and Sminn Hf

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

The idea behind Alvotech and Sminn 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.