Correlation Between Catheter Precision and Avita Medical

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

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

Diversification Opportunities for Catheter Precision and Avita Medical

-0.36

Correlation Coefficient

Catheter Precision  Avita Medical

Very good diversification

The 3 months correlation between Catheter and Avita is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Catheter Precision and Avita Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avita Medical and Catheter Precision 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 Catheter Precision 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 Catheter Precision i.e., Catheter Precision and Avita Medical go up and down completely randomly.

Pair Corralation between Catheter Precision and Avita Medical

Given the investment horizon of 90 days Catheter Precision is expected to generate 0.8 times more return on investment than Avita Medical. However, Catheter Precision is 1.25 times less risky than Avita Medical. It trades about 0.27 of its potential returns per unit of risk. Avita Medical is currently generating about -0.1 per unit of risk. If you would invest  33.00  in Catheter Precision on October 20, 2024 and sell it today you would earn a total of  13.00  from holding Catheter Precision or generate 39.39% return on investment over 90 days.

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

Catheter Precision  vs.  Avita Medical

Catheter Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catheter Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Catheter Precision and Avita Medical

The main advantage of trading using opposite Catheter Precision and Avita Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catheter Precision 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 Catheter Precision 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.