Correlation Between AVITA Medical and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on AVITA Medical and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and SCOTT TECHNOLOGY.
Diversification Opportunities for AVITA Medical and SCOTT TECHNOLOGY
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AVITA and SCOTT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of AVITA Medical i.e., AVITA Medical and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between AVITA Medical and SCOTT TECHNOLOGY
Assuming the 90 days trading horizon AVITA Medical is expected to generate 1.45 times more return on investment than SCOTT TECHNOLOGY. However, AVITA Medical is 1.45 times more volatile than SCOTT TECHNOLOGY. It trades about 0.05 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.01 per unit of risk. If you would invest 131.00 in AVITA Medical on September 4, 2024 and sell it today you would earn a total of 109.00 from holding AVITA Medical or generate 83.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
AVITA Medical vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| AVITA Medical |
| SCOTT TECHNOLOGY |
AVITA Medical and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and SCOTT TECHNOLOGY
The main advantage of trading using opposite AVITA Medical and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| AVITA Medical vs. Vastned Retail NV | AVITA Medical vs. JIAHUA STORES | AVITA Medical vs. Kaiser Aluminum | AVITA Medical vs. GREENX METALS LTD |
| SCOTT TECHNOLOGY vs. TOTAL GABON | SCOTT TECHNOLOGY vs. Walgreens Boots Alliance | SCOTT TECHNOLOGY vs. Peak Resources Limited |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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