Correlation Between Soho House and Alvotech

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

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

Diversification Opportunities for Soho House and Alvotech

0.7

Correlation Coefficient

Soho House  Alvotech

Poor diversification

The 3 months correlation between Soho and Alvotech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Soho House Co and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Soho House 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 Soho House Co 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 Soho House i.e., Soho House and Alvotech go up and down completely randomly.

Pair Corralation between Soho House and Alvotech

Given the investment horizon of 90 days Soho House Co is expected to generate 4.14 times more return on investment than Alvotech. However, Soho House is 4.14 times more volatile than Alvotech. It trades about 0.12 of its potential returns per unit of risk. Alvotech is currently generating about 0.02 per unit of risk. If you would invest  530.00  in Soho House Co on October 25, 2024 and sell it today you would earn a total of  234.00  from holding Soho House Co or generate 44.15% return on investment over 90 days.

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

Soho House Co  vs.  Alvotech

Soho House

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soho House Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Soho House displayed solid returns over the last few months and may actually be approaching a breakup point.

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 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 Soho House and Alvotech

The main advantage of trading using opposite Soho House and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soho House 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 Soho House Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.