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
Poor diversification
The 3 months correlation between Alvotech and Marel is 0.64. 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 under-perform the Marel Hf. In addition to that, Alvotech is 1.98 times more volatile than Marel hf. It trades about -0.2 of its total potential returns per unit of risk. Marel hf is currently generating about 0.35 per unit of volatility. If you would invest 58,000 in Marel hf on August 28, 2024 and sell it today you would earn a total of 4,200 from holding Marel hf or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvotech vs. Marel hf
Performance |
| Timeline |
| Alvotech |
| Marel hf |
Alvotech and Marel Hf Volatility Contrast
Predicted Return Density |
| Returns |
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.| Alvotech vs. Iceland Seafood International | Alvotech vs. Kvika banki hf | Alvotech vs. Arion banki hf | Alvotech vs. Icelandair Group hf |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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