Correlation Between Fate Therapeutics and Alvotech

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

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

Diversification Opportunities for Fate Therapeutics and Alvotech

-0.14

Correlation Coefficient

Fate Therapeutics  Alvotech

Good diversification

The 3 months correlation between Fate and Alvotech is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Fate 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 Fate 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 Fate Therapeutics i.e., Fate Therapeutics and Alvotech go up and down completely randomly.

Pair Corralation between Fate Therapeutics and Alvotech

Given the investment horizon of 90 days Fate Therapeutics is expected to generate 6.23 times less return on investment than Alvotech. In addition to that, Fate Therapeutics is 2.43 times more volatile than Alvotech. It trades about 0.0 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fate Therapeutics  vs.  Alvotech

Fate Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fate Therapeutics 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 Fate Therapeutics and Alvotech

The main advantage of trading using opposite Fate Therapeutics and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fate 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 Fate 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.