Correlation Between Avita Medical and Beyond Air

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

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

Diversification Opportunities for Avita Medical and Beyond Air

0.6

Correlation Coefficient

Avita Medical  Beyond Air

Poor diversification

The 3 months correlation between Avita and Beyond is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Avita Medical and Beyond Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Air 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 Beyond Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Air has no effect on the direction of Avita Medical i.e., Avita Medical and Beyond Air go up and down completely randomly.

Pair Corralation between Avita Medical and Beyond Air

Given the investment horizon of 90 days Avita Medical is expected to generate 1.0 times more return on investment than Beyond Air. However, Avita Medical is 1.0 times more volatile than Beyond Air. It trades about 0.01 of its potential returns per unit of risk. Beyond Air is currently generating about -0.22 per unit of risk. If you would invest  887.00  in Avita Medical on December 5, 2024 and sell it today you would lose (11.00) from holding Avita Medical or give up 1.24% 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.  Beyond Air

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.

Beyond Air

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beyond Air has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Avita Medical and Beyond Air

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

The idea behind Avita Medical and Beyond Air 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.