Correlation Between Hampidjan and Alvotech

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

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

Diversification Opportunities for Hampidjan and Alvotech

0.25

Correlation Coefficient

Hampidjan  Alvotech

Modest diversification

The 3 months correlation between Hampidjan and Alvotech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hampidjan hf and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Hampidjan 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 Hampidjan hf 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 Hampidjan i.e., Hampidjan and Alvotech go up and down completely randomly.

Pair Corralation between Hampidjan and Alvotech

Assuming the 90 days trading horizon Hampidjan hf is expected to under-perform the Alvotech. But the stock apears to be less risky and, when comparing its historical volatility, Hampidjan hf is 1.36 times less risky than Alvotech. The stock trades about -0.02 of its potential returns per unit of risk. The Alvotech is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  158,500  in Alvotech on September 5, 2024 and sell it today you would earn a total of  2,000  from holding Alvotech or generate 1.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Hampidjan hf  vs.  Alvotech

Hampidjan hf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hampidjan hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Hampidjan is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Alvotech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Alvotech is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hampidjan and Alvotech

The main advantage of trading using opposite Hampidjan and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hampidjan 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 Hampidjan hf 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.