Correlation Between Avita Medical and GlucoTrack

Can any of the company-specific risk be diversified away by investing in both Avita Medical and GlucoTrack 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 GlucoTrack into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avita Medical and GlucoTrack, you can compare the effects of market volatilities on Avita Medical and GlucoTrack 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 GlucoTrack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avita Medical and GlucoTrack.

Diversification Opportunities for Avita Medical and GlucoTrack

-0.91

Correlation Coefficient

Avita Medical  GlucoTrack

Pay attention - limited upside

The 3 months correlation between Avita and GlucoTrack is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and GlucoTrack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlucoTrack 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 GlucoTrack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlucoTrack has no effect on the direction of Avita Medical i.e., Avita Medical and GlucoTrack go up and down completely randomly.

Pair Corralation between Avita Medical and GlucoTrack

Given the investment horizon of 90 days Avita Medical is expected to generate 0.52 times more return on investment than GlucoTrack. However, Avita Medical is 1.94 times less risky than GlucoTrack. It trades about 0.03 of its potential returns per unit of risk. GlucoTrack is currently generating about -0.01 per unit of risk. If you would invest  1,111  in Avita Medical on September 14, 2024 and sell it today you would earn a total of  170.00  from holding Avita Medical or generate 15.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Avita Medical  vs.  GlucoTrack

Avita Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avita Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Avita Medical disclosed solid returns over the last few months and may actually be approaching a breakup point.

GlucoTrack

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlucoTrack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Avita Medical and GlucoTrack

The main advantage of trading using opposite Avita Medical and GlucoTrack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avita Medical position performs unexpectedly, GlucoTrack 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 GlucoTrack will offset losses from the drop in GlucoTrack's long position.

The idea behind Avita Medical and GlucoTrack pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.