Correlation Between Alvotech and Knife River
Can any of the company-specific risk be diversified away by investing in both Alvotech and Knife River 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 Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvotech and Knife River, you can compare the effects of market volatilities on Alvotech and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Knife River.
Diversification Opportunities for Alvotech and Knife River
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alvotech and Knife is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Alvotech i.e., Alvotech and Knife River go up and down completely randomly.
Pair Corralation between Alvotech and Knife River
Given the investment horizon of 90 days Alvotech is expected to under-perform the Knife River. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 1.5 times less risky than Knife River. The stock trades about -0.12 of its potential returns per unit of risk. The Knife River is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 8,788 in Knife River on September 5, 2024 and sell it today you would earn a total of 1,571 from holding Knife River or generate 17.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvotech vs. Knife River
Performance |
| Timeline |
| Alvotech |
| Knife River |
Alvotech and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alvotech and Knife River
The main advantage of trading using opposite Alvotech and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River's long position.| Alvotech vs. Candel Therapeutics | Alvotech vs. Cingulate Warrants | Alvotech vs. Unicycive Therapeutics | Alvotech vs. Cardio Diagnostics Holdings |
| Knife River vs. Omni Health | Knife River vs. Valneva SE ADR | Knife River vs. Alvotech | Knife River vs. RadNet Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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