Correlation Between Alvotech and Altair Engineering

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Can any of the company-specific risk be diversified away by investing in both Alvotech and Altair Engineering 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 Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvotech and Altair Engineering, you can compare the effects of market volatilities on Alvotech and Altair Engineering 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 Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Altair Engineering.

Diversification Opportunities for Alvotech and Altair Engineering

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Alvotech and Altair is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering 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 Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of Alvotech i.e., Alvotech and Altair Engineering go up and down completely randomly.

Pair Corralation between Alvotech and Altair Engineering

Given the investment horizon of 90 days Alvotech is expected to under-perform the Altair Engineering. In addition to that, Alvotech is 1.48 times more volatile than Altair Engineering. It trades about -0.37 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.06 per unit of volatility. If you would invest  8,456  in Altair Engineering on December 29, 2023 and sell it today you would earn a total of  171.00  from holding Altair Engineering or generate 2.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Alvotech  vs.  Altair Engineering

 Performance 
       Timeline  
Alvotech 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
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 displayed solid returns over the last few months and may actually be approaching a breakup point.
Altair Engineering 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Altair Engineering is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Alvotech and Altair Engineering Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alvotech and Altair Engineering

The main advantage of trading using opposite Alvotech and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Altair Engineering 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 Altair Engineering will offset losses from the drop in Altair Engineering's long position.
The idea behind Alvotech and Altair Engineering 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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