Correlation Between Alvotech and Soho House

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

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

Diversification Opportunities for Alvotech and Soho House

0.7

Correlation Coefficient

Alvotech  Soho House

Poor diversification

The 3 months correlation between Alvotech and Soho is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Soho House Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soho House 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 Soho House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soho House has no effect on the direction of Alvotech i.e., Alvotech and Soho House go up and down completely randomly.

Pair Corralation between Alvotech and Soho House

Given the investment horizon of 90 days Alvotech is expected to generate 0.66 times more return on investment than Soho House. However, Alvotech is 1.51 times less risky than Soho House. It trades about 0.26 of its potential returns per unit of risk. Soho House Co is currently generating about 0.17 per unit of risk. If you would invest  1,256  in Alvotech on October 25, 2024 and sell it today you would earn a total of  73.00  from holding Alvotech or generate 5.81% return on investment over 90 days.

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

Alvotech  vs.  Soho House Co

Alvotech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 1 (%) 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.

Soho House

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Alvotech and Soho House

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

The idea behind Alvotech and Soho House Co 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 Stocks Directory module to find actively traded stocks across global markets.