Correlation Between Alvotech and 40434LAB1

Can any of the company-specific risk be diversified away by investing in both Alvotech and 40434LAB1 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 40434LAB1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alvotech and HP INC, you can compare the effects of market volatilities on Alvotech and 40434LAB1 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 40434LAB1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and 40434LAB1.

Diversification Opportunities for Alvotech and 40434LAB1

0.21

Correlation Coefficient

Alvotech  40434LAB1

Modest diversification

The 3 months correlation between Alvotech and 40434LAB1 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and HP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 40434LAB1 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 40434LAB1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 40434LAB1 has no effect on the direction of Alvotech i.e., Alvotech and 40434LAB1 go up and down completely randomly.

Pair Corralation between Alvotech and 40434LAB1

Given the investment horizon of 90 days Alvotech is expected to under-perform the 40434LAB1. In addition to that, Alvotech is 7.09 times more volatile than HP INC. It trades about -0.18 of its total potential returns per unit of risk. HP INC is currently generating about -0.06 per unit of volatility. If you would invest  9,585  in HP INC on December 30, 2024 and sell it today you would lose (140.00) from holding HP INC or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Alvotech  vs.  HP INC

Alvotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

40434LAB1

Risk-Adjusted Performance

Very Weak

Over the last 90 days HP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 40434LAB1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alvotech and 40434LAB1

The main advantage of trading using opposite Alvotech and 40434LAB1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, 40434LAB1 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 40434LAB1 will offset losses from the drop in 40434LAB1's long position.

The idea behind Alvotech and HP 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.