Correlation Between Monogram Orthopaedics and Avita Medical

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

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

Diversification Opportunities for Monogram Orthopaedics and Avita Medical

-0.52

Correlation Coefficient

Monogram Orthopaedics  Avita Medical

Excellent diversification

The 3 months correlation between Monogram and Avita is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Monogram Orthopaedics Common and Avita Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avita Medical and Monogram Orthopaedics 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 Monogram Orthopaedics Common 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 Monogram Orthopaedics i.e., Monogram Orthopaedics and Avita Medical go up and down completely randomly.

Pair Corralation between Monogram Orthopaedics and Avita Medical

Given the investment horizon of 90 days Monogram Orthopaedics Common is expected to generate 1.59 times more return on investment than Avita Medical. However, Monogram Orthopaedics is 1.59 times more volatile than Avita Medical. It trades about 0.28 of its potential returns per unit of risk. Avita Medical is currently generating about 0.05 per unit of risk. If you would invest  205.00  in Monogram Orthopaedics Common on September 16, 2024 and sell it today you would earn a total of  61.00  from holding Monogram Orthopaedics Common or generate 29.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Monogram Orthopaedics Common  vs.  Avita Medical

Monogram Orthopaedics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monogram Orthopaedics Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Avita Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avita Medical are ranked lower than 8 (%) 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 Monogram Orthopaedics and Avita Medical

The main advantage of trading using opposite Monogram Orthopaedics and Avita Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monogram Orthopaedics 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 Monogram Orthopaedics Common 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.