Correlation Between Brainsway and Maple Leaf

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

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

Diversification Opportunities for Brainsway and Maple Leaf

0.53

Correlation Coefficient

Brainsway  Maple Leaf

Very weak diversification

The 3 months correlation between Brainsway and Maple is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Brainsway and Maple Leaf Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Green 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Green has no effect on the direction of Brainsway i.e., Brainsway and Maple Leaf go up and down completely randomly.

Pair Corralation between Brainsway and Maple Leaf

Given the investment horizon of 90 days Brainsway is expected to generate 13.29 times less return on investment than Maple Leaf. But when comparing it to its historical volatility, Brainsway is 4.21 times less risky than Maple Leaf. It trades about 0.02 of its potential returns per unit of risk. Maple Leaf Green is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Maple Leaf Green on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Maple Leaf Green or generate 0.0% return on investment over 90 days.

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

Brainsway  vs.  Maple Leaf Green

Brainsway

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Maple Leaf Green

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maple Leaf Green are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Maple Leaf reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brainsway and Maple Leaf

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

The idea behind Brainsway and Maple Leaf Green 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.