Correlation Between AVITA Medical and NEXA RESOURCES
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and NEXA RESOURCES 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 NEXA RESOURCES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and NEXA RESOURCES SA, you can compare the effects of market volatilities on AVITA Medical and NEXA RESOURCES 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 NEXA RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and NEXA RESOURCES.
Diversification Opportunities for AVITA Medical and NEXA RESOURCES
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AVITA and NEXA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and NEXA RESOURCES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXA RESOURCES SA 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 NEXA RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXA RESOURCES SA has no effect on the direction of AVITA Medical i.e., AVITA Medical and NEXA RESOURCES go up and down completely randomly.
Pair Corralation between AVITA Medical and NEXA RESOURCES
Assuming the 90 days trading horizon AVITA Medical is expected to generate 1.8 times more return on investment than NEXA RESOURCES. However, AVITA Medical is 1.8 times more volatile than NEXA RESOURCES SA. It trades about 0.09 of its potential returns per unit of risk. NEXA RESOURCES SA is currently generating about 0.04 per unit of risk. If you would invest 162.00 in AVITA Medical on September 3, 2024 and sell it today you would earn a total of 78.00 from holding AVITA Medical or generate 48.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. NEXA RESOURCES SA
Performance |
| Timeline |
| AVITA Medical |
| NEXA RESOURCES SA |
AVITA Medical and NEXA RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and NEXA RESOURCES
The main advantage of trading using opposite AVITA Medical and NEXA RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, NEXA RESOURCES 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 NEXA RESOURCES will offset losses from the drop in NEXA RESOURCES's long position.| AVITA Medical vs. Tradeweb Markets | AVITA Medical vs. Mitsui Chemicals | AVITA Medical vs. The Trade Desk | AVITA Medical vs. USWE SPORTS AB |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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