Correlation Between Brainsway and Icecure Medical

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

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

Diversification Opportunities for Brainsway and Icecure Medical

0.25

Correlation Coefficient

Brainsway  Icecure Medical

Modest diversification

The 3 months correlation between Brainsway and Icecure is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brainsway and Icecure Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icecure Medical 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 Icecure Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icecure Medical has no effect on the direction of Brainsway i.e., Brainsway and Icecure Medical go up and down completely randomly.

Pair Corralation between Brainsway and Icecure Medical

Given the investment horizon of 90 days Brainsway is expected to generate 1.09 times less return on investment than Icecure Medical. But when comparing it to its historical volatility, Brainsway is 1.57 times less risky than Icecure Medical. It trades about 0.15 of its potential returns per unit of risk. Icecure Medical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Icecure Medical on September 3, 2024 and sell it today you would earn a total of  19.00  from holding Icecure Medical or generate 29.69% return on investment over 90 days.

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

Brainsway  vs.  Icecure Medical

Brainsway

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Brainsway showed solid returns over the last few months and may actually be approaching a breakup point.

Icecure Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icecure Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Icecure Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brainsway and Icecure Medical

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

The idea behind Brainsway and Icecure Medical 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.