Correlation Between AVITA Medical and Schlumberger
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Schlumberger 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 Schlumberger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Schlumberger Limited, you can compare the effects of market volatilities on AVITA Medical and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Schlumberger.
Diversification Opportunities for AVITA Medical and Schlumberger
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AVITA and Schlumberger is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of AVITA Medical i.e., AVITA Medical and Schlumberger go up and down completely randomly.
Pair Corralation between AVITA Medical and Schlumberger
Assuming the 90 days trading horizon AVITA Medical is expected to generate 2.27 times more return on investment than Schlumberger. However, AVITA Medical is 2.27 times more volatile than Schlumberger Limited. It trades about 0.03 of its potential returns per unit of risk. Schlumberger Limited is currently generating about -0.03 per unit of risk. If you would invest 228.00 in AVITA Medical on September 14, 2024 and sell it today you would earn a total of 14.00 from holding AVITA Medical or generate 6.14% 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. Schlumberger Limited
Performance |
| Timeline |
| AVITA Medical |
| Schlumberger Limited |
AVITA Medical and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Schlumberger
The main advantage of trading using opposite AVITA Medical and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.| AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc |
| Schlumberger vs. AVITA Medical | Schlumberger vs. InPlay Oil Corp | Schlumberger vs. Universal Display | Schlumberger vs. MeVis Medical Solutions |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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