Correlation Between Alvotech and Lincoln Educational

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

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

Diversification Opportunities for Alvotech and Lincoln Educational

-0.38

Correlation Coefficient

Alvotech  Lincoln Educational

Very good diversification

The 3 months correlation between Alvotech and Lincoln is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational 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 Lincoln Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Educational has no effect on the direction of Alvotech i.e., Alvotech and Lincoln Educational go up and down completely randomly.

Pair Corralation between Alvotech and Lincoln Educational

Given the investment horizon of 90 days Alvotech is expected to under-perform the Lincoln Educational. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 1.28 times less risky than Lincoln Educational. The stock trades about -0.05 of its potential returns per unit of risk. The Lincoln Educational Services is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  992.00  in Lincoln Educational Services on December 4, 2024 and sell it today you would earn a total of  827.00  from holding Lincoln Educational Services or generate 83.37% return on investment over 90 days.

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

Alvotech  vs.  Lincoln Educational Services

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.

Lincoln Educational

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Lincoln Educational

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

The idea behind Alvotech and Lincoln Educational Services 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.