Correlation Between Alvotech and Marel Hf

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

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

Diversification Opportunities for Alvotech and Marel Hf

-0.36

Correlation Coefficient

Alvotech  Marel Hf

Very good diversification

The 3 months correlation between Alvotech and Marel is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Marel hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marel hf and Alvotech 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 Alvotech are associated (or correlated) with Marel Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marel hf has no effect on the direction of Alvotech i.e., Alvotech and Marel Hf go up and down completely randomly.

Pair Corralation between Alvotech and Marel Hf

Assuming the 90 days trading horizon Alvotech is expected to generate 1.82 times more return on investment than Marel Hf. However, Alvotech is 1.82 times more volatile than Marel hf. It trades about 0.0 of its potential returns per unit of risk. Marel hf is currently generating about -0.04 per unit of risk. If you would invest  190,500  in Alvotech on March 20, 2024 and sell it today you would lose (500.00) from holding Alvotech or give up 0.26% of portfolio value over 90 days.

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

Alvotech  vs.  Marel hf

Alvotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alvotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Marel hf

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marel hf are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Marel Hf is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alvotech and Marel Hf

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

The idea behind Alvotech and Marel hf 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.