Correlation Between Avita Medical and GE HealthCare

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

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

Diversification Opportunities for Avita Medical and GE HealthCare

-0.81

Correlation Coefficient

Avita Medical  GE HealthCare

Pay attention - limited upside

The 3 months correlation between Avita and GEHC is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and GE HealthCare Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE HealthCare Techno 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 GE HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE HealthCare Techno has no effect on the direction of Avita Medical i.e., Avita Medical and GE HealthCare go up and down completely randomly.

Pair Corralation between Avita Medical and GE HealthCare

Given the investment horizon of 90 days Avita Medical is expected to generate 2.41 times more return on investment than GE HealthCare. However, Avita Medical is 2.41 times more volatile than GE HealthCare Technologies. It trades about 0.06 of its potential returns per unit of risk. GE HealthCare Technologies is currently generating about -0.19 per unit of risk. If you would invest  1,056  in Avita Medical on September 21, 2024 and sell it today you would earn a total of  100.00  from holding Avita Medical or generate 9.47% 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.  GE HealthCare Technologies

Avita Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avita Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Avita Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GE HealthCare Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE HealthCare Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Avita Medical and GE HealthCare

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

The idea behind Avita Medical and GE HealthCare Technologies 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.