Correlation Between Alvotech and ASE Industrial

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

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

Diversification Opportunities for Alvotech and ASE Industrial

0.22

Correlation Coefficient

Alvotech  ASE Industrial

Modest diversification

The 3 months correlation between Alvotech and ASE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding 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 ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Alvotech i.e., Alvotech and ASE Industrial go up and down completely randomly.

Pair Corralation between Alvotech and ASE Industrial

Given the investment horizon of 90 days Alvotech is expected to generate 0.84 times more return on investment than ASE Industrial. However, Alvotech is 1.19 times less risky than ASE Industrial. It trades about 0.03 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.02 per unit of risk. If you would invest  1,224  in Alvotech on October 9, 2024 and sell it today you would earn a total of  86.00  from holding Alvotech or generate 7.03% return on investment over 90 days.

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

Alvotech  vs.  ASE Industrial Holding

Alvotech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alvotech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ASE Industrial Holding

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Alvotech and ASE Industrial

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

The idea behind Alvotech and ASE Industrial Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.