Correlation Between Orthofix Medical and Avita Medical
Can any of the company-specific risk be diversified away by investing in both Orthofix 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 Orthofix 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 Orthofix Medical and Avita Medical, you can compare the effects of market volatilities on Orthofix 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 Orthofix Medical with a short position of Avita Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orthofix Medical and Avita Medical.
Diversification Opportunities for Orthofix Medical and Avita Medical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Orthofix and Avita is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Orthofix Medical and Avita Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avita Medical and Orthofix 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 Orthofix Medical 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 Orthofix Medical i.e., Orthofix Medical and Avita Medical go up and down completely randomly.
Pair Corralation between Orthofix Medical and Avita Medical
Given the investment horizon of 90 days Orthofix Medical is expected to under-perform the Avita Medical. But the stock apears to be less risky and, when comparing its historical volatility, Orthofix Medical is 1.53 times less risky than Avita Medical. The stock trades about -0.06 of its potential returns per unit of risk. The Avita Medical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,287 in Avita Medical on September 14, 2024 and sell it today you would lose (6.00) from holding Avita Medical or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orthofix Medical vs. Avita Medical
Performance |
| Timeline |
| Orthofix Medical |
| Avita Medical |
Orthofix Medical and Avita Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orthofix Medical and Avita Medical
The main advantage of trading using opposite Orthofix Medical and Avita Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orthofix 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.| Orthofix Medical vs. Avita Medical | Orthofix Medical vs. Sight Sciences | Orthofix Medical vs. Treace Medical Concepts | Orthofix Medical vs. Neuropace |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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