Correlation Between Alvotech and Eastern
Can any of the company-specific risk be diversified away by investing in both Alvotech and Eastern 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 Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvotech and Eastern Co, you can compare the effects of market volatilities on Alvotech and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Eastern.
Diversification Opportunities for Alvotech and Eastern
Average diversification
The 3 months correlation between Alvotech and Eastern is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Alvotech i.e., Alvotech and Eastern go up and down completely randomly.
Pair Corralation between Alvotech and Eastern
Given the investment horizon of 90 days Alvotech is expected to under-perform the Eastern. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 1.34 times less risky than Eastern. The stock trades about -0.07 of its potential returns per unit of risk. The Eastern Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,486 in Eastern Co on September 1, 2024 and sell it today you would earn a total of 386.00 from holding Eastern Co or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvotech vs. Eastern Co
Performance |
| Timeline |
| Alvotech |
| Eastern |
Alvotech and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alvotech and Eastern
The main advantage of trading using opposite Alvotech and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Alvotech vs. Tff Pharmaceuticals | Alvotech vs. Eliem Therapeutics | Alvotech vs. Inhibrx | Alvotech vs. Enliven Therapeutics |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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