Correlation Between Alvotech and Raphael Pharmaceutical

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

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

Diversification Opportunities for Alvotech and Raphael Pharmaceutical

-0.18

Correlation Coefficient

Alvotech  Raphael Pharmaceutical

Good diversification

The 3 months correlation between Alvotech and Raphael is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Raphael Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphael Pharmaceutical 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 Raphael Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphael Pharmaceutical has no effect on the direction of Alvotech i.e., Alvotech and Raphael Pharmaceutical go up and down completely randomly.

Pair Corralation between Alvotech and Raphael Pharmaceutical

Given the investment horizon of 90 days Alvotech is expected to under-perform the Raphael Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 5.57 times less risky than Raphael Pharmaceutical. The stock trades about -0.14 of its potential returns per unit of risk. The Raphael Pharmaceutical is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Raphael Pharmaceutical on December 29, 2024 and sell it today you would earn a total of  74.00  from holding Raphael Pharmaceutical or generate 284.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Alvotech  vs.  Raphael Pharmaceutical

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Raphael Pharmaceutical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raphael Pharmaceutical are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Raphael Pharmaceutical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Raphael Pharmaceutical

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

The idea behind Alvotech and Raphael Pharmaceutical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..