Correlation Between Brainsway and Razor Labs

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

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

Diversification Opportunities for Brainsway and Razor Labs

0.15

Correlation Coefficient

Brainsway  Razor Labs

Average diversification

The 3 months correlation between Brainsway and Razor is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Brainsway and Razor Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Razor Labs and Brainsway 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 Brainsway are associated (or correlated) with Razor Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Razor Labs has no effect on the direction of Brainsway i.e., Brainsway and Razor Labs go up and down completely randomly.

Pair Corralation between Brainsway and Razor Labs

Assuming the 90 days trading horizon Brainsway is expected to generate 0.76 times more return on investment than Razor Labs. However, Brainsway is 1.31 times less risky than Razor Labs. It trades about 0.06 of its potential returns per unit of risk. Razor Labs is currently generating about -0.12 per unit of risk. If you would invest  168,100  in Brainsway on December 30, 2024 and sell it today you would earn a total of  10,600  from holding Brainsway or generate 6.31% return on investment over 90 days.

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

Brainsway  vs.  Razor Labs

Brainsway

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brainsway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Razor Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Razor Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Brainsway and Razor Labs

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

The idea behind Brainsway and Razor Labs 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.