Correlation Between SurModics and BrainsWay

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

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

Diversification Opportunities for SurModics and BrainsWay

0.76

Correlation Coefficient

SurModics  BrainsWay

Poor diversification

The 3 months correlation between SurModics and BrainsWay is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and BrainsWay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrainsWay and SurModics 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 SurModics 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 SurModics i.e., SurModics and BrainsWay go up and down completely randomly.

Pair Corralation between SurModics and BrainsWay

Given the investment horizon of 90 days SurModics is expected to generate 0.57 times more return on investment than BrainsWay. However, SurModics is 1.77 times less risky than BrainsWay. It trades about -0.17 of its potential returns per unit of risk. BrainsWay is currently generating about -0.13 per unit of risk. If you would invest  3,968  in SurModics on December 24, 2024 and sell it today you would lose (930.00) from holding SurModics or give up 23.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

SurModics  vs.  BrainsWay

SurModics

Risk-Adjusted Performance

Very Weak

Over the last 90 days SurModics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly 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

Very Weak

Over the last 90 days BrainsWay 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 nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SurModics and BrainsWay

The main advantage of trading using opposite SurModics and BrainsWay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SurModics 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 SurModics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.