Correlation Between Western Copper and AVITA Medical

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Can any of the company-specific risk be diversified away by investing in both Western Copper 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 Western Copper and AVITA Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and AVITA Medical, you can compare the effects of market volatilities on Western Copper 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 Western Copper with a short position of AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and AVITA Medical.

Diversification Opportunities for Western Copper and AVITA Medical

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Western and AVITA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical and Western Copper 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 Western Copper and 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 Western Copper i.e., Western Copper and AVITA Medical go up and down completely randomly.

Pair Corralation between Western Copper and AVITA Medical

Assuming the 90 days trading horizon Western Copper and is expected to generate 0.39 times more return on investment than AVITA Medical. However, Western Copper and is 2.54 times less risky than AVITA Medical. It trades about -0.03 of its potential returns per unit of risk. AVITA Medical is currently generating about -0.21 per unit of risk. If you would invest  97.00  in Western Copper and on October 22, 2024 and sell it today you would lose (2.00) from holding Western Copper and or give up 2.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Western Copper and  vs.  AVITA Medical

 Performance 
       Timeline  
Western Copper 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
AVITA Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AVITA Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Western Copper and AVITA Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Western Copper and AVITA Medical

The main advantage of trading using opposite Western Copper and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper 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.
The idea behind Western Copper and and AVITA Medical 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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