Correlation Between AVITA Medical and MeVis Medical

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

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

Diversification Opportunities for AVITA Medical and MeVis Medical

-0.25

Correlation Coefficient

AVITA Medical  MeVis Medical

Very good diversification

The 3 months correlation between AVITA and MeVis is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and MeVis Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeVis Medical Solutions 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 MeVis Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeVis Medical Solutions has no effect on the direction of AVITA Medical i.e., AVITA Medical and MeVis Medical go up and down completely randomly.

Pair Corralation between AVITA Medical and MeVis Medical

Assuming the 90 days trading horizon AVITA Medical is expected to under-perform the MeVis Medical. In addition to that, AVITA Medical is 9.79 times more volatile than MeVis Medical Solutions. It trades about -0.32 of its total potential returns per unit of risk. MeVis Medical Solutions is currently generating about 0.14 per unit of volatility. If you would invest  2,440  in MeVis Medical Solutions on October 26, 2024 and sell it today you would earn a total of  40.00  from holding MeVis Medical Solutions or generate 1.64% return on investment over 90 days.

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

AVITA Medical  vs.  MeVis Medical Solutions

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.

MeVis Medical Solutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MeVis Medical Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MeVis Medical is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AVITA Medical and MeVis Medical

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

The idea behind AVITA Medical and MeVis Medical Solutions 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.