Correlation Between Brainsway and Aurora Spine

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

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

Diversification Opportunities for Brainsway and Aurora Spine

-0.1

Correlation Coefficient

Brainsway  Aurora Spine

Good diversification

The 3 months correlation between Brainsway and Aurora is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Brainsway and Aurora Spine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Spine 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 Aurora Spine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Spine has no effect on the direction of Brainsway i.e., Brainsway and Aurora Spine go up and down completely randomly.

Pair Corralation between Brainsway and Aurora Spine

Given the investment horizon of 90 days Brainsway is expected to generate 0.74 times more return on investment than Aurora Spine. However, Brainsway is 1.35 times less risky than Aurora Spine. It trades about 0.01 of its potential returns per unit of risk. Aurora Spine is currently generating about -0.09 per unit of risk. If you would invest  958.00  in Brainsway on December 2, 2024 and sell it today you would lose (3.00) from holding Brainsway or give up 0.31% of portfolio value over 90 days.

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

Brainsway  vs.  Aurora Spine

Brainsway

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brainsway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Brainsway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Aurora Spine

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Brainsway and Aurora Spine

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

The idea behind Brainsway and Aurora Spine 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.