Correlation Between Alvotech and Vestis

Can any of the company-specific risk be diversified away by investing in both Alvotech and Vestis 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 Vestis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alvotech and Vestis, you can compare the effects of market volatilities on Alvotech and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Vestis.

Diversification Opportunities for Alvotech and Vestis

-0.62

Correlation Coefficient

Alvotech  Vestis

Excellent diversification

The 3 months correlation between Alvotech and Vestis is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Alvotech i.e., Alvotech and Vestis go up and down completely randomly.

Pair Corralation between Alvotech and Vestis

Given the investment horizon of 90 days Alvotech is expected to generate 1.02 times less return on investment than Vestis. But when comparing it to its historical volatility, Alvotech is 1.61 times less risky than Vestis. It trades about 0.08 of its potential returns per unit of risk. Vestis is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,496  in Vestis on September 16, 2024 and sell it today you would earn a total of  109.00  from holding Vestis or generate 7.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alvotech  vs.  Vestis

Alvotech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vestis

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vestis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alvotech and Vestis

The main advantage of trading using opposite Alvotech and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.

The idea behind Alvotech and Vestis 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.