Correlation Between Iargento and Brainsway

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

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

Diversification Opportunities for Iargento and Brainsway

0.28

Correlation Coefficient

Iargento  Brainsway

Modest diversification

The 3 months correlation between Iargento and Brainsway is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Iargento Hi Tech and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Iargento 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 Iargento Hi Tech 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 Iargento i.e., Iargento and Brainsway go up and down completely randomly.

Pair Corralation between Iargento and Brainsway

Assuming the 90 days trading horizon Iargento Hi Tech is expected to generate 1.55 times more return on investment than Brainsway. However, Iargento is 1.55 times more volatile than Brainsway. It trades about 0.0 of its potential returns per unit of risk. Brainsway is currently generating about -0.04 per unit of risk. If you would invest  8,580  in Iargento Hi Tech on November 29, 2024 and sell it today you would lose (380.00) from holding Iargento Hi Tech or give up 4.43% of portfolio value over 90 days.

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

Iargento Hi Tech  vs.  Brainsway

Iargento Hi Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iargento Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iargento is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brainsway

Risk-Adjusted Performance

Weak

Over the last 90 days Brainsway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Iargento and Brainsway

The main advantage of trading using opposite Iargento and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iargento 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 Iargento Hi Tech 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..