Correlation Between Caribou Biosciences and Alvotech

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

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

Diversification Opportunities for Caribou Biosciences and Alvotech

0.06

Correlation Coefficient

Caribou Biosciences  Alvotech

Significant diversification

The 3 months correlation between Caribou and Alvotech is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Caribou Biosciences 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 Caribou Biosciences 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 Caribou Biosciences i.e., Caribou Biosciences and Alvotech go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Alvotech

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Alvotech. In addition to that, Caribou Biosciences is 2.2 times more volatile than Alvotech. It trades about -0.05 of its total potential returns per unit of risk. Alvotech is currently generating about 0.04 per unit of volatility. If you would invest  980.00  in Alvotech on September 23, 2024 and sell it today you would earn a total of  211.00  from holding Alvotech or generate 21.53% return on investment over 90 days.

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

Caribou Biosciences  vs.  Alvotech

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Alvotech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 7 (%) 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 Caribou Biosciences and Alvotech

The main advantage of trading using opposite Caribou Biosciences and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribou Biosciences 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 Caribou Biosciences 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.