Correlation Between SAFETY MEDICAL and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both SAFETY 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 SAFETY 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 SAFETY MEDICAL PROD and AVITA Medical, you can compare the effects of market volatilities on SAFETY 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 SAFETY MEDICAL with a short position of AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and AVITA Medical.
Diversification Opportunities for SAFETY MEDICAL and AVITA Medical
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SAFETY and AVITA is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical and SAFETY 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 SAFETY MEDICAL PROD 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 SAFETY MEDICAL i.e., SAFETY MEDICAL and AVITA Medical go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and AVITA Medical
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the AVITA Medical. But the stock apears to be less risky and, when comparing its historical volatility, SAFETY MEDICAL PROD is 1.29 times less risky than AVITA Medical. The stock trades about -0.25 of its potential returns per unit of risk. The AVITA Medical is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 189.00 in AVITA Medical on September 1, 2024 and sell it today you would earn a total of 47.00 from holding AVITA Medical or generate 24.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. AVITA Medical
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| AVITA Medical |
SAFETY MEDICAL and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and AVITA Medical
The main advantage of trading using opposite SAFETY MEDICAL and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY 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.| SAFETY MEDICAL vs. MOLSON RS BEVERAGE | SAFETY MEDICAL vs. Molson Coors Beverage | SAFETY MEDICAL vs. ADRIATIC METALS LS 013355 | SAFETY MEDICAL vs. United Insurance Holdings |
| AVITA Medical vs. Perma Fix Environmental Services | AVITA Medical vs. RELIANCE STEEL AL | AVITA Medical vs. Caltagirone SpA | AVITA Medical vs. Reliance Steel Aluminum |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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