Correlation Between AVITA Medical and YAMAHA P

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

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

Diversification Opportunities for AVITA Medical and YAMAHA P

-0.15

Correlation Coefficient

AVITA Medical  YAMAHA P

Good diversification

The 3 months correlation between AVITA and YAMAHA is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and YAMAHA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAMAHA P 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 YAMAHA P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAMAHA P has no effect on the direction of AVITA Medical i.e., AVITA Medical and YAMAHA P go up and down completely randomly.

Pair Corralation between AVITA Medical and YAMAHA P

Assuming the 90 days trading horizon AVITA Medical is expected to generate 2.37 times more return on investment than YAMAHA P. However, AVITA Medical is 2.37 times more volatile than YAMAHA P . It trades about -0.02 of its potential returns per unit of risk. YAMAHA P is currently generating about -0.1 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 Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

AVITA Medical  vs.  YAMAHA P

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.

YAMAHA P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAMAHA P 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AVITA Medical and YAMAHA P

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

The idea behind AVITA Medical and YAMAHA P 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.