Correlation Between Alvotech and Biglari Holdings

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

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

Diversification Opportunities for Alvotech and Biglari Holdings

-0.44

Correlation Coefficient

Alvotech  Biglari Holdings

Very good diversification

The 3 months correlation between Alvotech and Biglari is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings 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 Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Alvotech i.e., Alvotech and Biglari Holdings go up and down completely randomly.

Pair Corralation between Alvotech and Biglari Holdings

Given the investment horizon of 90 days Alvotech is expected to generate 4.7 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Alvotech is 1.04 times less risky than Biglari Holdings. It trades about 0.02 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16,493  in Biglari Holdings on September 24, 2024 and sell it today you would earn a total of  8,575  from holding Biglari Holdings or generate 51.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Alvotech  vs.  Biglari Holdings

Alvotech

Risk-Adjusted Performance

5 of 100

Modest

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

Biglari Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Biglari Holdings

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

The idea behind Alvotech and Biglari Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.