Correlation Between X4 Pharmaceuticals and Alvotech

Can any of the company-specific risk be diversified away by investing in both X4 Pharmaceuticals 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 X4 Pharmaceuticals and Alvotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X4 Pharmaceuticals and Alvotech, you can compare the effects of market volatilities on X4 Pharmaceuticals 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 X4 Pharmaceuticals with a short position of Alvotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of X4 Pharmaceuticals and Alvotech.

Diversification Opportunities for X4 Pharmaceuticals and Alvotech

-0.07

Correlation Coefficient

X4 Pharmaceuticals  Alvotech

Good diversification

The 3 months correlation between XFOR and Alvotech is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding X4 Pharmaceuticals and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and X4 Pharmaceuticals 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 X4 Pharmaceuticals 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 X4 Pharmaceuticals i.e., X4 Pharmaceuticals and Alvotech go up and down completely randomly.

Pair Corralation between X4 Pharmaceuticals and Alvotech

Given the investment horizon of 90 days X4 Pharmaceuticals is expected to generate 6.87 times more return on investment than Alvotech. However, X4 Pharmaceuticals is 6.87 times more volatile than Alvotech. It trades about 0.05 of its potential returns per unit of risk. Alvotech is currently generating about 0.1 per unit of risk. If you would invest  66.00  in X4 Pharmaceuticals on September 26, 2024 and sell it today you would lose (8.00) from holding X4 Pharmaceuticals or give up 12.12% of portfolio value over 90 days.

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

X4 Pharmaceuticals  vs.  Alvotech

X4 Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in X4 Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, X4 Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Alvotech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with X4 Pharmaceuticals and Alvotech

The main advantage of trading using opposite X4 Pharmaceuticals and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X4 Pharmaceuticals 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 X4 Pharmaceuticals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.