Correlation Between Alvotech and Zijin Mining

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

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

Diversification Opportunities for Alvotech and Zijin Mining

0.65

Correlation Coefficient

Alvotech  Zijin Mining

Poor diversification

The 3 months correlation between Alvotech and Zijin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group 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 Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of Alvotech i.e., Alvotech and Zijin Mining go up and down completely randomly.

Pair Corralation between Alvotech and Zijin Mining

Given the investment horizon of 90 days Alvotech is expected to generate 0.47 times more return on investment than Zijin Mining. However, Alvotech is 2.11 times less risky than Zijin Mining. It trades about 0.04 of its potential returns per unit of risk. Zijin Mining Group is currently generating about -0.02 per unit of risk. If you would invest  1,135  in Alvotech on August 31, 2024 and sell it today you would earn a total of  33.00  from holding Alvotech or generate 2.91% return on investment over 90 days.

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

Alvotech  vs.  Zijin Mining Group

Alvotech

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 2 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

Zijin Mining Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zijin Mining Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Zijin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alvotech and Zijin Mining

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

The idea behind Alvotech and Zijin Mining Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.