Correlation Between Festi Hf and Alvotech
Can any of the company-specific risk be diversified away by investing in both Festi Hf and Alvotech 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 Festi Hf and Alvotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Festi hf and Alvotech, you can compare the effects of market volatilities on Festi Hf and Alvotech 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 Festi Hf with a short position of Alvotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Festi Hf and Alvotech.
Diversification Opportunities for Festi Hf and Alvotech
Poor diversification
The 3 months correlation between Festi and Alvotech is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Festi hf and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Festi Hf 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 Festi hf are associated (or correlated) with Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Festi Hf i.e., Festi Hf and Alvotech go up and down completely randomly.
Pair Corralation between Festi Hf and Alvotech
Assuming the 90 days trading horizon Festi Hf is expected to generate 1.58 times less return on investment than Alvotech. But when comparing it to its historical volatility, Festi hf is 2.75 times less risky than Alvotech. It trades about 0.08 of its potential returns per unit of risk. Alvotech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 103,500 in Alvotech on August 28, 2024 and sell it today you would earn a total of 62,500 from holding Alvotech or generate 60.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Festi hf vs. Alvotech
Performance |
| Timeline |
| Festi hf |
| Alvotech |
Festi Hf and Alvotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Festi Hf and Alvotech
The main advantage of trading using opposite Festi Hf and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Festi Hf position performs unexpectedly, Alvotech 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 Alvotech will offset losses from the drop in Alvotech's long position.The idea behind Festi hf and Alvotech 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.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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