Correlation Between Razor Labs and Brainsway

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

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

Diversification Opportunities for Razor Labs and Brainsway

0.15

Correlation Coefficient

Razor Labs  Brainsway

Average diversification

The 3 months correlation between Razor and Brainsway is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Razor Labs and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Razor Labs 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 Razor Labs 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 Razor Labs i.e., Razor Labs and Brainsway go up and down completely randomly.

Pair Corralation between Razor Labs and Brainsway

Assuming the 90 days trading horizon Razor Labs is expected to under-perform the Brainsway. In addition to that, Razor Labs is 1.31 times more volatile than Brainsway. It trades about -0.12 of its total potential returns per unit of risk. Brainsway is currently generating about 0.06 per unit of volatility. If you would invest  168,100  in Brainsway on December 30, 2024 and sell it today you would earn a total of  10,600  from holding Brainsway or generate 6.31% return on investment over 90 days.

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

Razor Labs  vs.  Brainsway

Razor Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Razor Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Brainsway

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brainsway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Razor Labs and Brainsway

The main advantage of trading using opposite Razor Labs and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Razor Labs 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 Razor Labs 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.