Correlation Between Hologic and Avita Medical

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

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

Diversification Opportunities for Hologic and Avita Medical

-0.75

Correlation Coefficient

Hologic  Avita Medical

Pay attention - limited upside

The 3 months correlation between Hologic and Avita is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hologic and Avita Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avita Medical and Hologic 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 Hologic 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 Hologic i.e., Hologic and Avita Medical go up and down completely randomly.

Pair Corralation between Hologic and Avita Medical

Given the investment horizon of 90 days Hologic is expected to generate 30.87 times less return on investment than Avita Medical. But when comparing it to its historical volatility, Hologic is 3.88 times less risky than Avita Medical. It trades about 0.01 of its potential returns per unit of risk. Avita Medical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  676.00  in Avita Medical on September 13, 2024 and sell it today you would earn a total of  647.00  from holding Avita Medical or generate 95.71% return on investment over 90 days.

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

Hologic  vs.  Avita Medical

Hologic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hologic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Avita Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avita Medical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Avita Medical disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hologic and Avita Medical

The main advantage of trading using opposite Hologic and Avita Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hologic 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 Hologic 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.