Correlation Between Photomyne and Brainsway

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

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

Diversification Opportunities for Photomyne and Brainsway

0.92

Correlation Coefficient

Photomyne  Brainsway

Almost no diversification

The 3 months correlation between Photomyne and Brainsway is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Photomyne and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Photomyne 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 Photomyne 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 Photomyne i.e., Photomyne and Brainsway go up and down completely randomly.

Pair Corralation between Photomyne and Brainsway

Assuming the 90 days trading horizon Photomyne is expected to generate 1.42 times less return on investment than Brainsway. But when comparing it to its historical volatility, Photomyne is 2.4 times less risky than Brainsway. It trades about 0.32 of its potential returns per unit of risk. Brainsway is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  139,600  in Brainsway on September 3, 2024 and sell it today you would earn a total of  36,500  from holding Brainsway or generate 26.15% return on investment over 90 days.

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

Photomyne  vs.  Brainsway

Photomyne

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Photomyne are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Photomyne sustained solid returns over the last few months and may actually be approaching a breakup point.

Brainsway

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brainsway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Photomyne and Brainsway

The main advantage of trading using opposite Photomyne and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Photomyne 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 Photomyne 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.