Correlation Between AVITA Medical and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Hitachi Construction 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 Hitachi Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Hitachi Construction Machinery, you can compare the effects of market volatilities on AVITA Medical and Hitachi Construction 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 Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Hitachi Construction.
Diversification Opportunities for AVITA Medical and Hitachi Construction
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AVITA and Hitachi is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of AVITA Medical i.e., AVITA Medical and Hitachi Construction go up and down completely randomly.
Pair Corralation between AVITA Medical and Hitachi Construction
Assuming the 90 days trading horizon AVITA Medical is expected to generate 2.13 times more return on investment than Hitachi Construction. However, AVITA Medical is 2.13 times more volatile than Hitachi Construction Machinery. It trades about 0.0 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.01 per unit of risk. If you would invest 181.00 in AVITA Medical on October 26, 2024 and sell it today you would lose (19.00) from holding AVITA Medical or give up 10.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. Hitachi Construction Machinery
Performance |
| Timeline |
| AVITA Medical |
| Hitachi Construction |
AVITA Medical and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Hitachi Construction
The main advantage of trading using opposite AVITA Medical and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction's long position.| AVITA Medical vs. Benchmark Electronics | AVITA Medical vs. STMicroelectronics NV | AVITA Medical vs. Samsung Electronics Co | AVITA Medical vs. Molson Coors Beverage |
| Hitachi Construction vs. Aedas Homes SA | Hitachi Construction vs. CITY OFFICE REIT | Hitachi Construction vs. WIMFARM SA EO | Hitachi Construction vs. Daito Trust Construction |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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