Correlation Between BrainChip Holdings and Alpha

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

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

Diversification Opportunities for BrainChip Holdings and Alpha

-0.2

Correlation Coefficient

BrainChip Holdings  Alpha

Good diversification

The 3 months correlation between BrainChip and Alpha is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Alpha and Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha and Omega and BrainChip Holdings 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 BrainChip Holdings are associated (or correlated) with Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha and Omega has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and Alpha go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Alpha

Assuming the 90 days horizon BrainChip Holdings is expected to generate 22.04 times less return on investment than Alpha. But when comparing it to its historical volatility, BrainChip Holdings is 1.64 times less risky than Alpha. It trades about 0.01 of its potential returns per unit of risk. Alpha and Omega is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,217  in Alpha and Omega on September 20, 2024 and sell it today you would earn a total of  1,029  from holding Alpha and Omega or generate 31.99% return on investment over 90 days.

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

BrainChip Holdings  vs.  Alpha and Omega

BrainChip Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, BrainChip Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Alpha and Omega

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha and Omega are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BrainChip Holdings and Alpha

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

The idea behind BrainChip Holdings and Alpha and Omega 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..