Correlation Between VinFast Auto and Alvotech

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

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

Diversification Opportunities for VinFast Auto and Alvotech

-0.48

Correlation Coefficient

VinFast Auto  Alvotech

Very good diversification

The 3 months correlation between VinFast and Alvotech is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding VinFast Auto Ltd and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and VinFast Auto 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 VinFast Auto Ltd 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 VinFast Auto i.e., VinFast Auto and Alvotech go up and down completely randomly.

Pair Corralation between VinFast Auto and Alvotech

Considering the 90-day investment horizon VinFast Auto Ltd is expected to under-perform the Alvotech. In addition to that, VinFast Auto is 2.54 times more volatile than Alvotech. It trades about -0.21 of its total potential returns per unit of risk. Alvotech is currently generating about 0.52 per unit of volatility. If you would invest  1,128  in Alvotech on October 10, 2024 and sell it today you would earn a total of  197.00  from holding Alvotech or generate 17.46% return on investment over 90 days.

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

VinFast Auto Ltd  vs.  Alvotech

VinFast Auto

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VinFast Auto Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, VinFast Auto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alvotech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 2 (%) 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 VinFast Auto and Alvotech

The main advantage of trading using opposite VinFast Auto and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VinFast Auto 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 VinFast Auto Ltd 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.