Correlation Between Diamyd Medical and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical 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 Diamyd Medical and AVITA Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and AVITA Medical, you can compare the effects of market volatilities on Diamyd Medical 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 Diamyd Medical with a short position of AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and AVITA Medical.
Diversification Opportunities for Diamyd Medical and AVITA Medical
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Diamyd and AVITA is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical and Diamyd 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 Diamyd Medical AB 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 Diamyd Medical i.e., Diamyd Medical and AVITA Medical go up and down completely randomly.
Pair Corralation between Diamyd Medical and AVITA Medical
Assuming the 90 days horizon Diamyd Medical AB is expected to under-perform the AVITA Medical. But the stock apears to be less risky and, when comparing its historical volatility, Diamyd Medical AB is 1.05 times less risky than AVITA Medical. The stock trades about -0.13 of its potential returns per unit of risk. The AVITA Medical is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 162.00 in AVITA Medical on August 28, 2024 and sell it today you would earn a total of 86.00 from holding AVITA Medical or generate 53.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. AVITA Medical
Performance |
| Timeline |
| Diamyd Medical AB |
| AVITA Medical |
Diamyd Medical and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and AVITA Medical
The main advantage of trading using opposite Diamyd Medical and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical 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.| Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. NMI Holdings | Diamyd Medical vs. Origin Agritech | Diamyd Medical vs. SIVERS SEMICONDUCTORS AB |
| AVITA Medical vs. United Natural Foods | AVITA Medical vs. Lifeway Foods | AVITA Medical vs. Universal Insurance Holdings | AVITA Medical vs. Reinsurance Group of |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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