Correlation Between BrainsWay and Armm

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

By analyzing existing cross correlation between BrainsWay and Armm Inc, you can compare the effects of market volatilities on BrainsWay and Armm 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 Armm. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrainsWay and Armm.

Diversification Opportunities for BrainsWay and Armm

0.0

Correlation Coefficient

BrainsWay  Armm

Pay attention - limited upside

The 3 months correlation between BrainsWay and Armm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BrainsWay and Armm Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armm Inc 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 Armm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armm Inc has no effect on the direction of BrainsWay i.e., BrainsWay and Armm go up and down completely randomly.

Pair Corralation between BrainsWay and Armm

Assuming the 90 days horizon BrainsWay is expected to generate 2.26 times less return on investment than Armm. But when comparing it to its historical volatility, BrainsWay is 4.29 times less risky than Armm. It trades about 0.07 of its potential returns per unit of risk. Armm Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Armm Inc on September 26, 2024 and sell it today you would lose (50.91) from holding Armm Inc or give up 99.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BrainsWay  vs.  Armm Inc

BrainsWay

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainsWay are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, BrainsWay reported solid returns over the last few months and may actually be approaching a breakup point.

Armm Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armm Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Armm is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BrainsWay and Armm

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

The idea behind BrainsWay and Armm Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.