Correlation Between Alvotech and Catheter Precision

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

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

Diversification Opportunities for Alvotech and Catheter Precision

0.73

Correlation Coefficient

Alvotech  Catheter Precision

Poor diversification

The 3 months correlation between Alvotech and Catheter is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Alvotech i.e., Alvotech and Catheter Precision go up and down completely randomly.

Pair Corralation between Alvotech and Catheter Precision

Given the investment horizon of 90 days Alvotech is expected to under-perform the Catheter Precision. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 2.58 times less risky than Catheter Precision. The stock trades about -0.06 of its potential returns per unit of risk. The Catheter Precision is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Catheter Precision on December 21, 2024 and sell it today you would earn a total of  1.80  from holding Catheter Precision or generate 5.14% return on investment over 90 days.

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

Alvotech  vs.  Catheter Precision

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Catheter Precision

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Catheter Precision are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Catheter Precision disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Catheter Precision

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

The idea behind Alvotech and Catheter Precision 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.