Correlation Between Scilex Holding and Alvotech Warrant

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

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

Diversification Opportunities for Scilex Holding and Alvotech Warrant

0.76

Correlation Coefficient

Scilex Holding  Alvotech Warrant

Poor diversification

The 3 months correlation between Scilex and Alvotech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Scilex Holding and Alvotech Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech Warrant and Scilex 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 Scilex Holding are associated (or correlated) with Alvotech Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech Warrant has no effect on the direction of Scilex Holding i.e., Scilex Holding and Alvotech Warrant go up and down completely randomly.

Pair Corralation between Scilex Holding and Alvotech Warrant

Assuming the 90 days horizon Scilex Holding is expected to generate 1.31 times more return on investment than Alvotech Warrant. However, Scilex Holding is 1.31 times more volatile than Alvotech Warrant. It trades about 0.01 of its potential returns per unit of risk. Alvotech Warrant is currently generating about -0.04 per unit of risk. If you would invest  20.00  in Scilex Holding on December 30, 2024 and sell it today you would lose (10.00) from holding Scilex Holding or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

Scilex Holding  vs.  Alvotech Warrant

Scilex Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scilex Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Scilex Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alvotech Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvotech Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Scilex Holding and Alvotech Warrant

The main advantage of trading using opposite Scilex Holding and Alvotech Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scilex Holding position performs unexpectedly, Alvotech Warrant 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 Warrant will offset losses from the drop in Alvotech Warrant's long position.

The idea behind Scilex Holding and Alvotech Warrant 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.