Correlation Between Avita Medical and InMode
Can any of the company-specific risk be diversified away by investing in both Avita Medical and InMode 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 InMode into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avita Medical and InMode, you can compare the effects of market volatilities on Avita Medical and InMode 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 InMode. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avita Medical and InMode.
Diversification Opportunities for Avita Medical and InMode
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avita and InMode is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode 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 InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of Avita Medical i.e., Avita Medical and InMode go up and down completely randomly.
Pair Corralation between Avita Medical and InMode
Given the investment horizon of 90 days Avita Medical is expected to generate 1.36 times more return on investment than InMode. However, Avita Medical is 1.36 times more volatile than InMode. It trades about 0.08 of its potential returns per unit of risk. InMode is currently generating about -0.03 per unit of risk. If you would invest 1,052 in Avita Medical on September 20, 2024 and sell it today you would earn a total of 104.00 from holding Avita Medical or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avita Medical vs. InMode
Performance |
| Timeline |
| Avita Medical |
| InMode |
Avita Medical and InMode Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avita Medical and InMode
The main advantage of trading using opposite Avita Medical and InMode positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avita Medical position performs unexpectedly, InMode 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 InMode will offset losses from the drop in InMode's long position.| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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