Correlation Between Alvotech and Icelandair Group
Can any of the company-specific risk be diversified away by investing in both Alvotech and Icelandair Group 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 Icelandair Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvotech and Icelandair Group hf, you can compare the effects of market volatilities on Alvotech and Icelandair Group 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 Icelandair Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Icelandair Group.
Diversification Opportunities for Alvotech and Icelandair Group
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alvotech and Icelandair is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Icelandair Group hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icelandair Group 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 Icelandair Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icelandair Group has no effect on the direction of Alvotech i.e., Alvotech and Icelandair Group go up and down completely randomly.
Pair Corralation between Alvotech and Icelandair Group
Assuming the 90 days trading horizon Alvotech is expected to under-perform the Icelandair Group. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 1.28 times less risky than Icelandair Group. The stock trades about -0.18 of its potential returns per unit of risk. The Icelandair Group hf is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Icelandair Group hf on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Icelandair Group hf or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvotech vs. Icelandair Group hf
Performance |
| Timeline |
| Alvotech |
| Icelandair Group |
Alvotech and Icelandair Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alvotech and Icelandair Group
The main advantage of trading using opposite Alvotech and Icelandair Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Icelandair Group 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 Icelandair Group will offset losses from the drop in Icelandair Group's long position.The idea behind Alvotech and Icelandair Group 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.| Icelandair Group vs. Icelandic Salmon AS | Icelandair Group vs. lgerin Egill Skallagrmsson | Icelandair Group vs. Fly Play hf | Icelandair Group vs. Oculis Holding AG |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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