Correlation Between Alvotech and Nextplay Technologies

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

By analyzing existing cross correlation between Alvotech and Nextplay Technologies, you can compare the effects of market volatilities on Alvotech and Nextplay Technologies 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 Nextplay Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Nextplay Technologies.

Diversification Opportunities for Alvotech and Nextplay Technologies

0.68

Correlation Coefficient

Alvotech  Nextplay Technologies

Poor diversification

The 3 months correlation between Alvotech and Nextplay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Nextplay Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplay Technologies 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 Nextplay Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplay Technologies has no effect on the direction of Alvotech i.e., Alvotech and Nextplay Technologies go up and down completely randomly.

Pair Corralation between Alvotech and Nextplay Technologies

Given the investment horizon of 90 days Alvotech is expected to generate 226.85 times less return on investment than Nextplay Technologies. But when comparing it to its historical volatility, Alvotech is 59.17 times less risky than Nextplay Technologies. It trades about 0.05 of its potential returns per unit of risk. Nextplay Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Nextplay Technologies on January 25, 2024 and sell it today you would lose (26.00) from holding Nextplay Technologies or give up 39.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.82%
Values	Daily Returns

Alvotech  vs.  Nextplay Technologies

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 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.

Nextplay Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nextplay Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Nextplay Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alvotech and Nextplay Technologies

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

The idea behind Alvotech and Nextplay Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.