Correlation Between LION ONE and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and AVITA Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and AVITA Medical, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and AVITA Medical.
Diversification Opportunities for LION ONE and AVITA Medical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LION and AVITA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical and LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and AVITA Medical go up and down completely randomly.
Pair Corralation between LION ONE and AVITA Medical
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the AVITA Medical. But the stock apears to be less risky and, when comparing its historical volatility, LION ONE METALS is 1.21 times less risky than AVITA Medical. The stock trades about -0.23 of its potential returns per unit of risk. The AVITA Medical is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 186.00 in AVITA Medical on August 27, 2024 and sell it today you would earn a total of 62.00 from holding AVITA Medical or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LION ONE METALS vs. AVITA Medical
Performance |
| Timeline |
| LION ONE METALS |
| AVITA Medical |
LION ONE and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and AVITA Medical
The main advantage of trading using opposite LION ONE and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.| LION ONE vs. Austevoll Seafood ASA | LION ONE vs. TreeHouse Foods | LION ONE vs. National Retail Properties | LION ONE vs. AIR PRODCHEMICALS |
| AVITA Medical vs. LG Display Co | AVITA Medical vs. LION ONE METALS | AVITA Medical vs. Columbia Sportswear | AVITA Medical vs. VIRGIN WINES UK |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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