Correlation Between Candel Therapeutics and Alvotech

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

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

Diversification Opportunities for Candel Therapeutics and Alvotech

-0.49

Correlation Coefficient

Candel Therapeutics  Alvotech

Very good diversification

The 3 months correlation between Candel and Alvotech is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Candel Therapeutics 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 Candel Therapeutics 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 Candel Therapeutics i.e., Candel Therapeutics and Alvotech go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Alvotech

Given the investment horizon of 90 days Candel Therapeutics is expected to generate 7.71 times more return on investment than Alvotech. However, Candel Therapeutics is 7.71 times more volatile than Alvotech. It trades about 0.08 of its potential returns per unit of risk. Alvotech is currently generating about 0.05 per unit of risk. If you would invest  87.00  in Candel Therapeutics on September 4, 2024 and sell it today you would earn a total of  364.00  from holding Candel Therapeutics or generate 418.39% return on investment over 90 days.

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

Candel Therapeutics  vs.  Alvotech

Candel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Candel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Alvotech

Risk-Adjusted Performance

2 of 100

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.

Pair Trading with Candel Therapeutics and Alvotech

The main advantage of trading using opposite Candel Therapeutics and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Candel Therapeutics 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 Candel Therapeutics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.