Correlation Between BrainChip Holdings and Weebit Nano

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

By analyzing existing cross correlation between BrainChip Holdings and Weebit Nano Limited, you can compare the effects of market volatilities on BrainChip Holdings and Weebit Nano 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 Weebit Nano. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrainChip Holdings and Weebit Nano.

Diversification Opportunities for BrainChip Holdings and Weebit Nano

0.28

Correlation Coefficient

BrainChip Holdings  Weebit Nano

Modest diversification

The 3 months correlation between BrainChip and Weebit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Weebit Nano Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weebit Nano Limited 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 Weebit Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weebit Nano Limited has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and Weebit Nano go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Weebit Nano

Assuming the 90 days horizon BrainChip Holdings is expected to generate 0.91 times more return on investment than Weebit Nano. However, BrainChip Holdings is 1.1 times less risky than Weebit Nano. It trades about -0.02 of its potential returns per unit of risk. Weebit Nano Limited is currently generating about -0.06 per unit of risk. If you would invest  675.00  in BrainChip Holdings on September 19, 2024 and sell it today you would lose (34.00) from holding BrainChip Holdings or give up 5.04% of portfolio value over 90 days.

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

BrainChip Holdings  vs.  Weebit Nano Limited

BrainChip Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 6 (%) 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.

Weebit Nano Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weebit Nano Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Weebit Nano reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BrainChip Holdings and Weebit Nano

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

The idea behind BrainChip Holdings and Weebit Nano Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.