Correlation Between Materialise and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both Materialise and AVITA Medical 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 Materialise and AVITA Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and AVITA Medical, you can compare the effects of market volatilities on Materialise and AVITA Medical 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 Materialise with a short position of AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and AVITA Medical.
Diversification Opportunities for Materialise and AVITA Medical
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Materialise and AVITA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical and Materialise 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 Materialise NV are associated (or correlated) with AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of Materialise i.e., Materialise and AVITA Medical go up and down completely randomly.
Pair Corralation between Materialise and AVITA Medical
Assuming the 90 days trading horizon Materialise NV is expected to generate 0.43 times more return on investment than AVITA Medical. However, Materialise NV is 2.35 times less risky than AVITA Medical. It trades about -0.1 of its potential returns per unit of risk. AVITA Medical is currently generating about -0.16 per unit of risk. If you would invest 745.00 in Materialise NV on October 14, 2024 and sell it today you would lose (45.00) from holding Materialise NV or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. AVITA Medical
Performance |
| Timeline |
| Materialise NV |
| AVITA Medical |
Materialise and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and AVITA Medical
The main advantage of trading using opposite Materialise and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, AVITA Medical 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 AVITA Medical will offset losses from the drop in AVITA Medical's long position.| Materialise vs. Linedata Services SA | Materialise vs. Cairo Communication SpA | Materialise vs. Singapore Telecommunications Limited | Materialise vs. China Datang |
| AVITA Medical vs. Citic Telecom International | AVITA Medical vs. CITIC Telecom International | AVITA Medical vs. BURLINGTON STORES | AVITA Medical vs. Retail Estates NV |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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