Correlation Between BICO Group and BrainsWay

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

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

Diversification Opportunities for BICO Group and BrainsWay

-0.37

Correlation Coefficient

BICO Group  BrainsWay

Very good diversification

The 3 months correlation between BICO and BrainsWay is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and BrainsWay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrainsWay and BICO Group 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 BICO Group AB are associated (or correlated) with BrainsWay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrainsWay has no effect on the direction of BICO Group i.e., BICO Group and BrainsWay go up and down completely randomly.

Pair Corralation between BICO Group and BrainsWay

Assuming the 90 days horizon BICO Group is expected to generate 22.95 times less return on investment than BrainsWay. But when comparing it to its historical volatility, BICO Group AB is 5.12 times less risky than BrainsWay. It trades about 0.03 of its potential returns per unit of risk. BrainsWay is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  315.00  in BrainsWay on September 26, 2024 and sell it today you would earn a total of  538.00  from holding BrainsWay or generate 170.79% return on investment over 90 days.

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

BICO Group AB  vs.  BrainsWay

BICO Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BICO Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BrainsWay

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainsWay are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, BrainsWay reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BICO Group and BrainsWay

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

The idea behind BICO Group AB and BrainsWay 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.