Correlation Between AVITA Medical and Anglo American
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Anglo American 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 Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Anglo American plc, you can compare the effects of market volatilities on AVITA Medical and Anglo American 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 Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Anglo American.
Diversification Opportunities for AVITA Medical and Anglo American
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AVITA and Anglo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc 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 Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American plc has no effect on the direction of AVITA Medical i.e., AVITA Medical and Anglo American go up and down completely randomly.
Pair Corralation between AVITA Medical and Anglo American
Assuming the 90 days trading horizon AVITA Medical is expected to generate 1.81 times more return on investment than Anglo American. However, AVITA Medical is 1.81 times more volatile than Anglo American plc. It trades about 0.32 of its potential returns per unit of risk. Anglo American plc is currently generating about 0.1 per unit of risk. If you would invest 180.00 in AVITA Medical on September 2, 2024 and sell it today you would earn a total of 60.00 from holding AVITA Medical or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. Anglo American plc
Performance |
| Timeline |
| AVITA Medical |
| Anglo American plc |
AVITA Medical and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Anglo American
The main advantage of trading using opposite AVITA Medical and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| AVITA Medical vs. CECO ENVIRONMENTAL | AVITA Medical vs. MITSUBISHI STEEL MFG | AVITA Medical vs. SBI Insurance Group | AVITA Medical vs. BLUESCOPE STEEL |
| Anglo American vs. Data3 Limited | Anglo American vs. AVITA Medical | Anglo American vs. National Storage Affiliates | Anglo American vs. Datadog |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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