Correlation Between Avita Medical and CONMED

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

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

Diversification Opportunities for Avita Medical and CONMED

0.63

Correlation Coefficient

Avita Medical  CONMED

Poor diversification

The 3 months correlation between Avita and CONMED is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and CONMED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONMED 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 CONMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONMED has no effect on the direction of Avita Medical i.e., Avita Medical and CONMED go up and down completely randomly.

Pair Corralation between Avita Medical and CONMED

Given the investment horizon of 90 days Avita Medical is expected to under-perform the CONMED. In addition to that, Avita Medical is 3.67 times more volatile than CONMED. It trades about -0.11 of its total potential returns per unit of risk. CONMED is currently generating about -0.07 per unit of volatility. If you would invest  7,151  in CONMED on October 22, 2024 and sell it today you would lose (382.00) from holding CONMED or give up 5.34% of portfolio value over 90 days.

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

Avita Medical  vs.  CONMED

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CONMED

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CONMED are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, CONMED may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Avita Medical and CONMED

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

The idea behind Avita Medical and CONMED 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.