Correlation Between Pro Medicus and Bravura Solutions

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

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

Diversification Opportunities for Pro Medicus and Bravura Solutions

0.83

Correlation Coefficient

Pro Medicus  Bravura Solutions

Very poor diversification

The 3 months correlation between Pro and Bravura is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pro Medicus and Bravura Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravura Solutions and Pro Medicus 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 Pro Medicus are associated (or correlated) with Bravura Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravura Solutions has no effect on the direction of Pro Medicus i.e., Pro Medicus and Bravura Solutions go up and down completely randomly.

Pair Corralation between Pro Medicus and Bravura Solutions

Assuming the 90 days trading horizon Pro Medicus is expected to generate 1.25 times less return on investment than Bravura Solutions. But when comparing it to its historical volatility, Pro Medicus is 1.57 times less risky than Bravura Solutions. It trades about 0.27 of its potential returns per unit of risk. Bravura Solutions is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  148.00  in Bravura Solutions on September 22, 2024 and sell it today you would earn a total of  60.00  from holding Bravura Solutions or generate 40.54% return on investment over 90 days.

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

Pro Medicus  vs.  Bravura Solutions

Pro Medicus

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Medicus are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Pro Medicus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bravura Solutions

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bravura Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bravura Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pro Medicus and Bravura Solutions

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

The idea behind Pro Medicus and Bravura Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.