Correlation Between Alvotech and Southland Holdings

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

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

Diversification Opportunities for Alvotech and Southland Holdings

0.05

Correlation Coefficient

Alvotech  Southland Holdings

Significant diversification

The 3 months correlation between Alvotech and Southland is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Southland Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southland Holdings 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 Southland Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southland Holdings has no effect on the direction of Alvotech i.e., Alvotech and Southland Holdings go up and down completely randomly.

Pair Corralation between Alvotech and Southland Holdings

Given the investment horizon of 90 days Alvotech is expected to generate 0.64 times more return on investment than Southland Holdings. However, Alvotech is 1.56 times less risky than Southland Holdings. It trades about 0.02 of its potential returns per unit of risk. Southland Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,157  in Alvotech on October 11, 2024 and sell it today you would earn a total of  168.00  from holding Alvotech or generate 14.52% return on investment over 90 days.

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

Alvotech  vs.  Southland Holdings

Alvotech

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Southland Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southland Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Southland Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alvotech and Southland Holdings

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

The idea behind Alvotech and Southland Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.