Correlation Between Alvotech Warrant and Alpha Tau

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

By analyzing existing cross correlation between Alvotech Warrant and Alpha Tau Medical, you can compare the effects of market volatilities on Alvotech Warrant and Alpha Tau 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 Warrant with a short position of Alpha Tau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech Warrant and Alpha Tau.

Diversification Opportunities for Alvotech Warrant and Alpha Tau

-0.36

Correlation Coefficient

Alvotech Warrant  Alpha Tau

Very good diversification

The 3 months correlation between Alvotech and Alpha is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech Warrant and Alpha Tau Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Tau Medical and Alvotech Warrant 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 Warrant are associated (or correlated) with Alpha Tau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Tau Medical has no effect on the direction of Alvotech Warrant i.e., Alvotech Warrant and Alpha Tau go up and down completely randomly.

Pair Corralation between Alvotech Warrant and Alpha Tau

Assuming the 90 days horizon Alvotech Warrant is expected to under-perform the Alpha Tau. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech Warrant is 1.47 times less risky than Alpha Tau. The stock trades about -0.04 of its potential returns per unit of risk. The Alpha Tau Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Alpha Tau Medical on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Alpha Tau Medical or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

Alvotech Warrant  vs.  Alpha Tau Medical

Alvotech Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvotech Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Alpha Tau Medical

Risk-Adjusted Performance

OK

Over the last 90 days Alpha Tau Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Alpha Tau showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech Warrant and Alpha Tau

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

The idea behind Alvotech Warrant and Alpha Tau Medical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.