Correlation Between Nkarta and Alvotech

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

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

Diversification Opportunities for Nkarta and Alvotech

0.78

Correlation Coefficient

Nkarta  Alvotech

Poor diversification

The 3 months correlation between Nkarta and Alvotech is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Nkarta 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 Nkarta 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 Nkarta i.e., Nkarta and Alvotech go up and down completely randomly.

Pair Corralation between Nkarta and Alvotech

Given the investment horizon of 90 days Nkarta Inc is expected to generate 2.97 times more return on investment than Alvotech. However, Nkarta is 2.97 times more volatile than Alvotech. It trades about 0.0 of its potential returns per unit of risk. Alvotech is currently generating about -0.14 per unit of risk. If you would invest  232.00  in Nkarta Inc on December 29, 2024 and sell it today you would lose (32.00) from holding Nkarta Inc or give up 13.79% of portfolio value over 90 days.

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

Nkarta Inc  vs.  Alvotech

Nkarta Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nkarta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nkarta is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Nkarta and Alvotech

The main advantage of trading using opposite Nkarta and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nkarta 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 Nkarta 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.