Correlation Between Marel Hf and Alvotech
Can any of the company-specific risk be diversified away by investing in both Marel 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 Marel Hf and Alvotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marel hf and Alvotech, you can compare the effects of market volatilities on Marel 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 Marel Hf with a short position of Alvotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marel Hf and Alvotech.
Diversification Opportunities for Marel Hf and Alvotech
Poor diversification
The 3 months correlation between Marel and Alvotech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Marel hf and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Marel 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 Marel 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 Marel Hf i.e., Marel Hf and Alvotech go up and down completely randomly.
Pair Corralation between Marel Hf and Alvotech
Assuming the 90 days trading horizon Marel hf is expected to generate 0.54 times more return on investment than Alvotech. However, Marel hf is 1.86 times less risky than Alvotech. It trades about 0.25 of its potential returns per unit of risk. Alvotech is currently generating about -0.16 per unit of risk. If you would invest 57,600 in Marel hf on August 25, 2024 and sell it today you would earn a total of 3,100 from holding Marel hf or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marel hf vs. Alvotech
Performance |
| Timeline |
| Marel hf |
| Alvotech |
Marel Hf and Alvotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marel Hf and Alvotech
The main advantage of trading using opposite Marel Hf and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marel 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.| Marel Hf vs. Iceland Seafood International | Marel Hf vs. Kvika banki hf | Marel Hf vs. Arion banki hf | Marel Hf vs. Alvotech |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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