Correlation Between Alvotech and Hudson Technologies

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

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

Diversification Opportunities for Alvotech and Hudson Technologies

0.07

Correlation Coefficient

Alvotech  Hudson Technologies

Significant diversification

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

Pair Corralation between Alvotech and Hudson Technologies

Given the investment horizon of 90 days Alvotech is expected to under-perform the Hudson Technologies. In addition to that, Alvotech is 1.1 times more volatile than Hudson Technologies. It trades about -0.03 of its total potential returns per unit of risk. Hudson Technologies is currently generating about 0.12 per unit of volatility. If you would invest  529.00  in Hudson Technologies on December 20, 2024 and sell it today you would earn a total of  71.00  from holding Hudson Technologies or generate 13.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Alvotech  vs.  Hudson Technologies

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 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.

Hudson Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Hudson Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Hudson Technologies

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

The idea behind Alvotech and Hudson Technologies 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.