Correlation Between AVITA Medical and Blackstone

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

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

Diversification Opportunities for AVITA Medical and Blackstone

0.54

Correlation Coefficient

AVITA Medical  Blackstone

Very weak diversification

The 3 months correlation between AVITA and Blackstone is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group 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 Blackstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Group has no effect on the direction of AVITA Medical i.e., AVITA Medical and Blackstone go up and down completely randomly.

Pair Corralation between AVITA Medical and Blackstone

Assuming the 90 days trading horizon AVITA Medical is expected to under-perform the Blackstone. In addition to that, AVITA Medical is 2.46 times more volatile than Blackstone Group. It trades about -0.02 of its total potential returns per unit of risk. Blackstone Group is currently generating about 0.11 per unit of volatility. If you would invest  15,620  in Blackstone Group on October 26, 2024 and sell it today you would earn a total of  2,120  from holding Blackstone Group or generate 13.57% return on investment over 90 days.

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

AVITA Medical  vs.  Blackstone Group

AVITA Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AVITA Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, AVITA Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackstone Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blackstone reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVITA Medical and Blackstone

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

The idea behind AVITA Medical and Blackstone Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.