Correlation Between SYSTEMAIR and AVITA Medical

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

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

Diversification Opportunities for SYSTEMAIR and AVITA Medical

0.62

Correlation Coefficient

SYSTEMAIR  AVITA Medical

Poor diversification

The 3 months correlation between SYSTEMAIR and AVITA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical and SYSTEMAIR 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 SYSTEMAIR AB are associated (or correlated) with AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and AVITA Medical go up and down completely randomly.

Pair Corralation between SYSTEMAIR and AVITA Medical

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 0.41 times more return on investment than AVITA Medical. However, SYSTEMAIR AB is 2.43 times less risky than AVITA Medical. It trades about -0.06 of its potential returns per unit of risk. AVITA Medical is currently generating about -0.12 per unit of risk. If you would invest  775.00  in SYSTEMAIR AB on December 30, 2024 and sell it today you would lose (68.00) from holding SYSTEMAIR AB or give up 8.77% of portfolio value over 90 days.

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

SYSTEMAIR AB  vs.  AVITA Medical

SYSTEMAIR AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 fragile 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.

Pair Trading with SYSTEMAIR and AVITA Medical

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

The idea behind SYSTEMAIR AB and AVITA Medical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.