Correlation Between GMS and Alvotech

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

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

Diversification Opportunities for GMS and Alvotech

-0.52

Correlation Coefficient

GMS  Alvotech

Excellent diversification

The 3 months correlation between GMS and Alvotech is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and GMS 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 GMS Inc 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 GMS i.e., GMS and Alvotech go up and down completely randomly.

Pair Corralation between GMS and Alvotech

Considering the 90-day investment horizon GMS Inc is expected to under-perform the Alvotech. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 1.35 times less risky than Alvotech. The stock trades about -0.76 of its potential returns per unit of risk. The Alvotech is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest  1,128  in Alvotech on October 9, 2024 and sell it today you would earn a total of  202.00  from holding Alvotech or generate 17.91% return on investment over 90 days.

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

GMS Inc  vs.  Alvotech

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Alvotech

Risk-Adjusted Performance

2 of 100

Insignificant

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GMS and Alvotech

The main advantage of trading using opposite GMS and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.