Correlation Between Alvotech and Marex Group

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

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

Diversification Opportunities for Alvotech and Marex Group

-0.29

Correlation Coefficient

Alvotech  Marex Group

Very good diversification

The 3 months correlation between Alvotech and Marex is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc 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 Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Alvotech i.e., Alvotech and Marex Group go up and down completely randomly.

Pair Corralation between Alvotech and Marex Group

Given the investment horizon of 90 days Alvotech is expected to generate 0.66 times more return on investment than Marex Group. However, Alvotech is 1.52 times less risky than Marex Group. It trades about 0.58 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.2 per unit of risk. If you would invest  1,128  in Alvotech on October 8, 2024 and sell it today you would earn a total of  198.00  from holding Alvotech or generate 17.55% return on investment over 90 days.

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

Alvotech  vs.  Marex Group plc

Alvotech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 3 (%) 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.

Marex Group plc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Marex Group

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

The idea behind Alvotech and Marex Group plc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.