Correlation Between Sarepta Therapeutics and Alvotech

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

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

Diversification Opportunities for Sarepta Therapeutics and Alvotech

-0.11

Correlation Coefficient

Sarepta Therapeutics  Alvotech

Good diversification

The 3 months correlation between Sarepta and Alvotech is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sarepta Therapeutics and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Sarepta Therapeutics 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 Sarepta Therapeutics 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 Sarepta Therapeutics i.e., Sarepta Therapeutics and Alvotech go up and down completely randomly.

Pair Corralation between Sarepta Therapeutics and Alvotech

Given the investment horizon of 90 days Sarepta Therapeutics is expected to generate 3.32 times less return on investment than Alvotech. In addition to that, Sarepta Therapeutics is 1.64 times more volatile than Alvotech. It trades about 0.01 of its total potential returns per unit of risk. Alvotech is currently generating about 0.07 per unit of volatility. If you would invest  1,088  in Alvotech on September 14, 2024 and sell it today you would earn a total of  78.00  from holding Alvotech or generate 7.17% return on investment over 90 days.

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

Sarepta Therapeutics  vs.  Alvotech

Sarepta Therapeutics

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sarepta Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sarepta Therapeutics is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 very inconsistent basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sarepta Therapeutics and Alvotech

The main advantage of trading using opposite Sarepta Therapeutics and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarepta Therapeutics 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 Sarepta Therapeutics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.