Correlation Between Biglari Holdings and Alvotech

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

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

Diversification Opportunities for Biglari Holdings and Alvotech

-0.44

Correlation Coefficient

Biglari Holdings  Alvotech

Very good diversification

The 3 months correlation between Biglari and Alvotech is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Biglari Holdings 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 Biglari Holdings are associated (or correlated) with Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Alvotech go up and down completely randomly.

Pair Corralation between Biglari Holdings and Alvotech

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.93 times more return on investment than Alvotech. However, Biglari Holdings is 2.93 times more volatile than Alvotech. It trades about 0.31 of its potential returns per unit of risk. Alvotech is currently generating about -0.03 per unit of risk. If you would invest  20,698  in Biglari Holdings on September 24, 2024 and sell it today you would earn a total of  4,370  from holding Biglari Holdings or generate 21.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Biglari Holdings  vs.  Alvotech

Biglari Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Alvotech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Biglari Holdings and Alvotech

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

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