Correlation Between Alvotech and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Alvotech and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvotech and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Alvotech and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Cumberland Pharmaceuticals.
Diversification Opportunities for Alvotech and Cumberland Pharmaceuticals
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alvotech and Cumberland is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Alvotech i.e., Alvotech and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Alvotech and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Alvotech is expected to generate 0.7 times more return on investment than Cumberland Pharmaceuticals. However, Alvotech is 1.42 times less risky than Cumberland Pharmaceuticals. It trades about 0.06 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest 940.00 in Alvotech on August 25, 2024 and sell it today you would earn a total of 304.00 from holding Alvotech or generate 32.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvotech vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Alvotech |
| Cumberland Pharmaceuticals |
Alvotech and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alvotech and Cumberland Pharmaceuticals
The main advantage of trading using opposite Alvotech and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| Alvotech vs. Eliem Therapeutics | Alvotech vs. HCW Biologics | Alvotech vs. Scpharmaceuticals | Alvotech vs. Milestone Pharmaceuticals |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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