Correlation Between BrainChip Holdings and Alphawave

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

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

Diversification Opportunities for BrainChip Holdings and Alphawave

-0.33

Correlation Coefficient

BrainChip Holdings  Alphawave

Very good diversification

The 3 months correlation between BrainChip and Alphawave is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Alphawave IP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphawave IP Group 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 Alphawave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphawave IP Group has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and Alphawave go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Alphawave

Assuming the 90 days horizon BrainChip Holdings is expected to generate 1.24 times more return on investment than Alphawave. However, BrainChip Holdings is 1.24 times more volatile than Alphawave IP Group. It trades about 0.04 of its potential returns per unit of risk. Alphawave IP Group is currently generating about -0.31 per unit of risk. If you would invest  15.00  in BrainChip Holdings on September 23, 2024 and sell it today you would earn a total of  0.00  from holding BrainChip Holdings or generate 0.0% 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.  Alphawave IP Group

BrainChip Holdings

Risk-Adjusted Performance

6 of 100

OK

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. Despite nearly fragile technical indicators, BrainChip Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Alphawave IP Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphawave IP Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BrainChip Holdings and Alphawave

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

The idea behind BrainChip Holdings and Alphawave IP Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..