Correlation Between CompuGroup Medical and AVITA Medical

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

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

Diversification Opportunities for CompuGroup Medical and AVITA Medical

0.63

Correlation Coefficient

CompuGroup Medical  AVITA Medical

Poor diversification

The 3 months correlation between CompuGroup and AVITA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical and CompuGroup 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 CompuGroup Medical SE 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 CompuGroup Medical i.e., CompuGroup Medical and AVITA Medical go up and down completely randomly.

Pair Corralation between CompuGroup Medical and AVITA Medical

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to under-perform the AVITA Medical. But the stock apears to be less risky and, when comparing its historical volatility, CompuGroup Medical SE is 1.5 times less risky than AVITA Medical. The stock trades about -0.02 of its potential returns per unit of risk. The AVITA Medical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  126.00  in AVITA Medical on September 16, 2024 and sell it today you would earn a total of  112.00  from holding AVITA Medical or generate 88.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

CompuGroup Medical SE  vs.  AVITA Medical

CompuGroup Medical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical SE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

AVITA Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AVITA Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, AVITA Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CompuGroup Medical and AVITA Medical

The main advantage of trading using opposite CompuGroup Medical and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical 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 CompuGroup Medical SE 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.

Check out your portfolio center.

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.