Correlation Between Avita Medical and Milestone Scientific

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

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

Diversification Opportunities for Avita Medical and Milestone Scientific

-0.44

Correlation Coefficient

Avita Medical  Milestone Scientific

Very good diversification

The 3 months correlation between Avita and Milestone is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and Milestone Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Milestone Scientific 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 Milestone Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Milestone Scientific has no effect on the direction of Avita Medical i.e., Avita Medical and Milestone Scientific go up and down completely randomly.

Pair Corralation between Avita Medical and Milestone Scientific

Given the investment horizon of 90 days Avita Medical is expected to under-perform the Milestone Scientific. In addition to that, Avita Medical is 1.16 times more volatile than Milestone Scientific. It trades about -0.07 of its total potential returns per unit of risk. Milestone Scientific is currently generating about 0.04 per unit of volatility. If you would invest  93.00  in Milestone Scientific on December 28, 2024 and sell it today you would earn a total of  6.00  from holding Milestone Scientific or generate 6.45% return on investment over 90 days.

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

Avita Medical  vs.  Milestone Scientific

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Milestone Scientific

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Milestone Scientific are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Milestone Scientific unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avita Medical and Milestone Scientific

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

The idea behind Avita Medical and Milestone Scientific 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.