Correlation Between AVITA Medical and China Communications
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and China Communications 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 AVITA Medical and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and China Communications Services, you can compare the effects of market volatilities on AVITA Medical and China Communications 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 AVITA Medical with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and China Communications.
Diversification Opportunities for AVITA Medical and China Communications
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AVITA and China is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and AVITA Medical 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 AVITA Medical are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of AVITA Medical i.e., AVITA Medical and China Communications go up and down completely randomly.
Pair Corralation between AVITA Medical and China Communications
Assuming the 90 days trading horizon AVITA Medical is expected to generate 3.01 times more return on investment than China Communications. However, AVITA Medical is 3.01 times more volatile than China Communications Services. It trades about 0.22 of its potential returns per unit of risk. China Communications Services is currently generating about -0.06 per unit of risk. If you would invest 190.00 in AVITA Medical on August 30, 2024 and sell it today you would earn a total of 44.00 from holding AVITA Medical or generate 23.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AVITA Medical vs. China Communications Services
Performance |
| Timeline |
| AVITA Medical |
| China Communications |
AVITA Medical and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and China Communications
The main advantage of trading using opposite AVITA Medical and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc |
| China Communications vs. AVITA Medical | China Communications vs. TRADEGATE | China Communications vs. Merit Medical Systems | China Communications vs. SAFETY MEDICAL PROD |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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