Correlation Between AVITA Medical and GREEN PLAINS

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

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

Diversification Opportunities for AVITA Medical and GREEN PLAINS

0.6

Correlation Coefficient

AVITA Medical  GREEN PLAINS

Poor diversification

The 3 months correlation between AVITA and GREEN is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and GREEN PLAINS RENEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREEN PLAINS RENEW 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 GREEN PLAINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREEN PLAINS RENEW has no effect on the direction of AVITA Medical i.e., AVITA Medical and GREEN PLAINS go up and down completely randomly.

Pair Corralation between AVITA Medical and GREEN PLAINS

Assuming the 90 days trading horizon AVITA Medical is expected to generate 1.05 times more return on investment than GREEN PLAINS. However, AVITA Medical is 1.05 times more volatile than GREEN PLAINS RENEW. It trades about -0.07 of its potential returns per unit of risk. GREEN PLAINS RENEW is currently generating about -0.19 per unit of risk. If you would invest  226.00  in AVITA Medical on December 21, 2024 and sell it today you would lose (61.00) from holding AVITA Medical or give up 26.99% of portfolio value over 90 days.

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

AVITA Medical  vs.  GREEN PLAINS RENEW

AVITA Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVITA Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GREEN PLAINS RENEW

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AVITA Medical and GREEN PLAINS

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

The idea behind AVITA Medical and GREEN PLAINS RENEW 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.