Correlation Between AVITA Medical and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Sumitomo Chemical 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 Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Sumitomo Chemical, you can compare the effects of market volatilities on AVITA Medical and Sumitomo Chemical 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 Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Sumitomo Chemical.
Diversification Opportunities for AVITA Medical and Sumitomo Chemical
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AVITA and Sumitomo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical 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 Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of AVITA Medical i.e., AVITA Medical and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between AVITA Medical and Sumitomo Chemical
Assuming the 90 days trading horizon AVITA Medical is expected to generate 1.15 times more return on investment than Sumitomo Chemical. However, AVITA Medical is 1.15 times more volatile than Sumitomo Chemical. It trades about 0.1 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about 0.05 per unit of risk. If you would invest 163.00 in AVITA Medical on September 2, 2024 and sell it today you would earn a total of 77.00 from holding AVITA Medical or generate 47.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. Sumitomo Chemical
Performance |
| Timeline |
| AVITA Medical |
| Sumitomo Chemical |
AVITA Medical and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Sumitomo Chemical
The main advantage of trading using opposite AVITA Medical and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Sumitomo Chemical 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 Sumitomo Chemical will offset losses from the drop in Sumitomo Chemical'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 |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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