Correlation Between Golden Heaven and Alvotech

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

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

Diversification Opportunities for Golden Heaven and Alvotech

0.4

Correlation Coefficient

Golden Heaven  Alvotech

Very weak diversification

The 3 months correlation between Golden and Alvotech is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Golden Heaven Group and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Golden Heaven 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 Golden Heaven Group 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 Golden Heaven i.e., Golden Heaven and Alvotech go up and down completely randomly.

Pair Corralation between Golden Heaven and Alvotech

Given the investment horizon of 90 days Golden Heaven Group is expected to generate 6.02 times more return on investment than Alvotech. However, Golden Heaven is 6.02 times more volatile than Alvotech. It trades about 0.14 of its potential returns per unit of risk. Alvotech is currently generating about -0.18 per unit of risk. If you would invest  209.00  in Golden Heaven Group on December 28, 2024 and sell it today you would earn a total of  247.00  from holding Golden Heaven Group or generate 118.18% return on investment over 90 days.

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

Golden Heaven Group  vs.  Alvotech

Golden Heaven Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Heaven Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Golden Heaven reported solid returns over the last few months and may actually be approaching a breakup point.

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 Golden Heaven and Alvotech

The main advantage of trading using opposite Golden Heaven and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Heaven 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 Golden Heaven Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.