Correlation Between Oculis Holding and Alvotech

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

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

Diversification Opportunities for Oculis Holding and Alvotech

0.69

Correlation Coefficient

Oculis Holding  Alvotech

Poor diversification

The 3 months correlation between Oculis and Alvotech is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Oculis Holding AG and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Oculis Holding 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 Oculis Holding AG 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 Oculis Holding i.e., Oculis Holding and Alvotech go up and down completely randomly.

Pair Corralation between Oculis Holding and Alvotech

Assuming the 90 days trading horizon Oculis Holding AG is expected to generate 0.69 times more return on investment than Alvotech. However, Oculis Holding AG is 1.44 times less risky than Alvotech. It trades about 0.1 of its potential returns per unit of risk. Alvotech is currently generating about 0.02 per unit of risk. If you would invest  169,000  in Oculis Holding AG on September 13, 2024 and sell it today you would earn a total of  61,000  from holding Oculis Holding AG or generate 36.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	32.66%
Values	Daily Returns

Oculis Holding AG  vs.  Alvotech

Oculis Holding AG

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oculis Holding AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Oculis Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alvotech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oculis Holding and Alvotech

The main advantage of trading using opposite Oculis Holding and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oculis Holding 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 Oculis Holding AG 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.