Correlation Between Alvotech and FS KKR

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

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

Diversification Opportunities for Alvotech and FS KKR

-0.07

Correlation Coefficient

Alvotech  FS KKR

Good diversification

The 3 months correlation between Alvotech and FSK is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and FS KKR Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS KKR Capital 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 FS KKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS KKR Capital has no effect on the direction of Alvotech i.e., Alvotech and FS KKR go up and down completely randomly.

Pair Corralation between Alvotech and FS KKR

Given the investment horizon of 90 days Alvotech is expected to under-perform the FS KKR. In addition to that, Alvotech is 2.31 times more volatile than FS KKR Capital. It trades about -0.01 of its total potential returns per unit of risk. FS KKR Capital is currently generating about 0.1 per unit of volatility. If you would invest  1,789  in FS KKR Capital on October 22, 2024 and sell it today you would earn a total of  437.00  from holding FS KKR Capital or generate 24.43% return on investment over 90 days.

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

Alvotech  vs.  FS KKR Capital

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 weak basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FS KKR Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, FS KKR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alvotech and FS KKR

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

The idea behind Alvotech and FS KKR Capital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.