Correlation Between Brady and Supercom

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

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

Diversification Opportunities for Brady and Supercom

-0.18

Correlation Coefficient

Brady  Supercom

Good diversification

The 3 months correlation between Brady and Supercom is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Brady and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom and Brady 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 Brady are associated (or correlated) with Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Brady i.e., Brady and Supercom go up and down completely randomly.

Pair Corralation between Brady and Supercom

Considering the 90-day investment horizon Brady is expected to generate 0.14 times more return on investment than Supercom. However, Brady is 6.93 times less risky than Supercom. It trades about 0.06 of its potential returns per unit of risk. Supercom is currently generating about 0.0 per unit of risk. If you would invest  4,966  in Brady on October 12, 2024 and sell it today you would earn a total of  2,397  from holding Brady or generate 48.27% return on investment over 90 days.

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

Brady  vs.  Supercom

Brady

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brady has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Brady is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Supercom

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Supercom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brady and Supercom

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

The idea behind Brady and Supercom 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.