Correlation Between Alvotech and Summit Materials

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

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

Diversification Opportunities for Alvotech and Summit Materials

0.0

Correlation Coefficient

Alvotech  Summit Materials

Pay attention - limited upside

The 3 months correlation between Alvotech and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Alvotech i.e., Alvotech and Summit Materials go up and down completely randomly.

Pair Corralation between Alvotech and Summit Materials

Given the investment horizon of 90 days Alvotech is expected to under-perform the Summit Materials. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 1.08 times less risky than Summit Materials. The stock trades about -0.13 of its potential returns per unit of risk. The Summit Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,840  in Summit Materials on September 21, 2024 and sell it today you would earn a total of  195.00  from holding Summit Materials or generate 4.03% return on investment over 90 days.

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

Alvotech  vs.  Summit Materials

Alvotech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 7 (%) 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 January 2025.

Summit Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Summit Materials

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

The idea behind Alvotech and Summit Materials 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..