Correlation Between EDAP TMS and Brainsway

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

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

Diversification Opportunities for EDAP TMS and Brainsway

0.34

Correlation Coefficient

EDAP TMS  Brainsway

Weak diversification

The 3 months correlation between EDAP and Brainsway is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and EDAP TMS 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 EDAP TMS SA are associated (or correlated) with Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of EDAP TMS i.e., EDAP TMS and Brainsway go up and down completely randomly.

Pair Corralation between EDAP TMS and Brainsway

Given the investment horizon of 90 days EDAP TMS SA is expected to generate 1.23 times more return on investment than Brainsway. However, EDAP TMS is 1.23 times more volatile than Brainsway. It trades about 0.03 of its potential returns per unit of risk. Brainsway is currently generating about 0.02 per unit of risk. If you would invest  218.00  in EDAP TMS SA on December 29, 2024 and sell it today you would earn a total of  4.00  from holding EDAP TMS SA or generate 1.83% return on investment over 90 days.

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

EDAP TMS SA  vs.  Brainsway

EDAP TMS SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EDAP TMS SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, EDAP TMS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with EDAP TMS and Brainsway

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

The idea behind EDAP TMS SA and Brainsway 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.