Correlation Between CapitaLand Investment and Alvotech

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

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

Diversification Opportunities for CapitaLand Investment and Alvotech

0.88

Correlation Coefficient

CapitaLand Investment  Alvotech

Very poor diversification

The 3 months correlation between CapitaLand and Alvotech is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and CapitaLand Investment 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 CapitaLand Investment Limited 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 CapitaLand Investment i.e., CapitaLand Investment and Alvotech go up and down completely randomly.

Pair Corralation between CapitaLand Investment and Alvotech

Assuming the 90 days horizon CapitaLand Investment Limited is expected to generate 0.8 times more return on investment than Alvotech. However, CapitaLand Investment Limited is 1.25 times less risky than Alvotech. It trades about -0.13 of its potential returns per unit of risk. Alvotech is currently generating about -0.18 per unit of risk. If you would invest  199.00  in CapitaLand Investment Limited on December 30, 2024 and sell it today you would lose (32.00) from holding CapitaLand Investment Limited or give up 16.08% of portfolio value over 90 days.

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

CapitaLand Investment Limited  vs.  Alvotech

CapitaLand Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days CapitaLand Investment Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CapitaLand Investment and Alvotech

The main advantage of trading using opposite CapitaLand Investment and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment 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 CapitaLand Investment Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.