Correlation Between Luxfer Holdings and Alvotech

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

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

Diversification Opportunities for Luxfer Holdings and Alvotech

-0.46

Correlation Coefficient

Luxfer Holdings  Alvotech

Very good diversification

The 3 months correlation between Luxfer and Alvotech is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Luxfer Holdings 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 Luxfer Holdings PLC 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 Luxfer Holdings i.e., Luxfer Holdings and Alvotech go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Alvotech

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the Alvotech. In addition to that, Luxfer Holdings is 1.07 times more volatile than Alvotech. It trades about -0.3 of its total potential returns per unit of risk. Alvotech is currently generating about 0.5 per unit of volatility. If you would invest  1,128  in Alvotech on October 10, 2024 and sell it today you would earn a total of  182.00  from holding Alvotech or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Luxfer Holdings PLC  vs.  Alvotech

Luxfer Holdings PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Luxfer Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Alvotech

Risk-Adjusted Performance

2 of 100

Weak

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 Luxfer Holdings and Alvotech

The main advantage of trading using opposite Luxfer Holdings and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luxfer Holdings 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 Luxfer Holdings PLC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.