Correlation Between AVITA Medical and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and Ultra Clean 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 Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and Ultra Clean Holdings, you can compare the effects of market volatilities on AVITA Medical and Ultra Clean 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 Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and Ultra Clean.
Diversification Opportunities for AVITA Medical and Ultra Clean
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AVITA and Ultra is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings 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 Ultra Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Clean Holdings has no effect on the direction of AVITA Medical i.e., AVITA Medical and Ultra Clean go up and down completely randomly.
Pair Corralation between AVITA Medical and Ultra Clean
Assuming the 90 days trading horizon AVITA Medical is expected to generate 0.88 times more return on investment than Ultra Clean. However, AVITA Medical is 1.14 times less risky than Ultra Clean. It trades about 0.19 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about -0.1 per unit of risk. If you would invest 161.00 in AVITA Medical on September 3, 2024 and sell it today you would earn a total of 79.00 from holding AVITA Medical or generate 49.07% 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. Ultra Clean Holdings
Performance |
| Timeline |
| AVITA Medical |
| Ultra Clean Holdings |
AVITA Medical and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and Ultra Clean
The main advantage of trading using opposite AVITA Medical and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, Ultra Clean 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 Ultra Clean will offset losses from the drop in Ultra Clean'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 |
| Ultra Clean vs. ASML HOLDING NY | Ultra Clean vs. ASML Holding NV | Ultra Clean vs. ASML Holding NV | Ultra Clean vs. Applied Materials |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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