Correlation Between Alvotech and BAXALTA

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

By analyzing existing cross correlation between Alvotech and BAXALTA INC 4, you can compare the effects of market volatilities on Alvotech and BAXALTA 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 BAXALTA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and BAXALTA.

Diversification Opportunities for Alvotech and BAXALTA

-0.06

Correlation Coefficient

Alvotech  BAXALTA

Good diversification

The 3 months correlation between Alvotech and BAXALTA is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and BAXALTA INC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAXALTA INC 4 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 BAXALTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAXALTA INC 4 has no effect on the direction of Alvotech i.e., Alvotech and BAXALTA go up and down completely randomly.

Pair Corralation between Alvotech and BAXALTA

Given the investment horizon of 90 days Alvotech is expected to generate 1.96 times more return on investment than BAXALTA. However, Alvotech is 1.96 times more volatile than BAXALTA INC 4. It trades about 0.29 of its potential returns per unit of risk. BAXALTA INC 4 is currently generating about 0.01 per unit of risk. If you would invest  1,211  in Alvotech on October 20, 2024 and sell it today you would earn a total of  116.00  from holding Alvotech or generate 9.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Alvotech  vs.  BAXALTA INC 4

Alvotech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 6 (%) 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.

BAXALTA INC 4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAXALTA INC 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAXALTA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alvotech and BAXALTA

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

The idea behind Alvotech and BAXALTA INC 4 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..