Correlation Between CareCloud and Avita Medical
Can any of the company-specific risk be diversified away by investing in both CareCloud and Avita Medical 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 CareCloud and Avita Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareCloud and Avita Medical, you can compare the effects of market volatilities on CareCloud and Avita Medical 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 CareCloud with a short position of Avita Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareCloud and Avita Medical.
Diversification Opportunities for CareCloud and Avita Medical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CareCloud and Avita is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CareCloud and Avita Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avita Medical and CareCloud 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 CareCloud are associated (or correlated) with Avita Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avita Medical has no effect on the direction of CareCloud i.e., CareCloud and Avita Medical go up and down completely randomly.
Pair Corralation between CareCloud and Avita Medical
Given the investment horizon of 90 days CareCloud is expected to generate 3.3 times more return on investment than Avita Medical. However, CareCloud is 3.3 times more volatile than Avita Medical. It trades about 0.16 of its potential returns per unit of risk. Avita Medical is currently generating about 0.03 per unit of risk. If you would invest 279.00 in CareCloud on September 18, 2024 and sell it today you would earn a total of 72.00 from holding CareCloud or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CareCloud vs. Avita Medical
Performance |
| Timeline |
| CareCloud |
| Avita Medical |
CareCloud and Avita Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CareCloud and Avita Medical
The main advantage of trading using opposite CareCloud and Avita Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareCloud position performs unexpectedly, Avita Medical 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 Avita Medical will offset losses from the drop in Avita Medical's long position.The idea behind CareCloud and Avita Medical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Avita Medical vs. Clearpoint Neuro | Avita Medical vs. Sight Sciences | Avita Medical vs. Treace Medical Concepts | Avita Medical vs. Rxsight |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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