Correlation Between Hudson Technologies and Alvotech

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

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

Diversification Opportunities for Hudson Technologies and Alvotech

0.11

Correlation Coefficient

Hudson Technologies  Alvotech

Average diversification

The 3 months correlation between Hudson and Alvotech is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Hudson Technologies 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 Hudson Technologies 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 Hudson Technologies i.e., Hudson Technologies and Alvotech go up and down completely randomly.

Pair Corralation between Hudson Technologies and Alvotech

Given the investment horizon of 90 days Hudson Technologies is expected to generate 4.35 times less return on investment than Alvotech. But when comparing it to its historical volatility, Hudson Technologies is 1.01 times less risky than Alvotech. It trades about 0.04 of its potential returns per unit of risk. Alvotech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,089  in Alvotech on July 13, 2024 and sell it today you would earn a total of  196.00  from holding Alvotech or generate 18.0% return on investment over 90 days.

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

Hudson Technologies  vs.  Alvotech

Hudson Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Alvotech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Alvotech may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Hudson Technologies and Alvotech

The main advantage of trading using opposite Hudson Technologies and Alvotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies 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 Hudson Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.