Correlation Between Alvotech and 26875PAM3

Can any of the company-specific risk be diversified away by investing in both Alvotech and 26875PAM3 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 26875PAM3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alvotech and EOG RES INC, you can compare the effects of market volatilities on Alvotech and 26875PAM3 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 26875PAM3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and 26875PAM3.

Diversification Opportunities for Alvotech and 26875PAM3

-0.04

Correlation Coefficient

Alvotech  26875PAM3

Good diversification

The 3 months correlation between Alvotech and 26875PAM3 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and EOG RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG RES INC 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 26875PAM3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG RES INC has no effect on the direction of Alvotech i.e., Alvotech and 26875PAM3 go up and down completely randomly.

Pair Corralation between Alvotech and 26875PAM3

Given the investment horizon of 90 days Alvotech is expected to generate 2.1 times more return on investment than 26875PAM3. However, Alvotech is 2.1 times more volatile than EOG RES INC. It trades about 0.18 of its potential returns per unit of risk. EOG RES INC is currently generating about -0.21 per unit of risk. If you would invest  1,260  in Alvotech on October 27, 2024 and sell it today you would earn a total of  52.00  from holding Alvotech or generate 4.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Alvotech  vs.  EOG RES INC

Alvotech

Risk-Adjusted Performance

1 of 100

Very 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.

EOG RES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG RES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAM3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alvotech and 26875PAM3

The main advantage of trading using opposite Alvotech and 26875PAM3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, 26875PAM3 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 26875PAM3 will offset losses from the drop in 26875PAM3's long position.

The idea behind Alvotech and EOG RES INC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.