Correlation Between AVITA Medical and Pembina Pipeline

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

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

Diversification Opportunities for AVITA Medical and Pembina Pipeline

0.09

Correlation Coefficient

AVITA Medical  Pembina Pipeline

Significant diversification

The 3 months correlation between AVITA and Pembina is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of AVITA Medical i.e., AVITA Medical and Pembina Pipeline go up and down completely randomly.

Pair Corralation between AVITA Medical and Pembina Pipeline

Assuming the 90 days trading horizon AVITA Medical is expected to generate 4.08 times more return on investment than Pembina Pipeline. However, AVITA Medical is 4.08 times more volatile than Pembina Pipeline Corp. It trades about -0.02 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.07 per unit of risk. If you would invest  186.00  in AVITA Medical on October 26, 2024 and sell it today you would lose (24.00) from holding AVITA Medical or give up 12.9% of portfolio value over 90 days.

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

AVITA Medical  vs.  Pembina Pipeline Corp

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.

Pembina Pipeline Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pembina Pipeline is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AVITA Medical and Pembina Pipeline

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

The idea behind AVITA Medical and Pembina Pipeline Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.