Correlation Between Aethlon Medical and Brainsway

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

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

Diversification Opportunities for Aethlon Medical and Brainsway

-0.4

Correlation Coefficient

Aethlon Medical  Brainsway

Very good diversification

The 3 months correlation between Aethlon and Brainsway is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aethlon Medical and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Aethlon Medical 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 Aethlon Medical 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 Aethlon Medical i.e., Aethlon Medical and Brainsway go up and down completely randomly.

Pair Corralation between Aethlon Medical and Brainsway

Given the investment horizon of 90 days Aethlon Medical is expected to under-perform the Brainsway. In addition to that, Aethlon Medical is 1.96 times more volatile than Brainsway. It trades about -0.01 of its total potential returns per unit of risk. Brainsway is currently generating about 0.09 per unit of volatility. If you would invest  230.00  in Brainsway on September 30, 2024 and sell it today you would earn a total of  683.00  from holding Brainsway or generate 296.96% return on investment over 90 days.

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

Aethlon Medical  vs.  Brainsway

Aethlon Medical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aethlon Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Aethlon Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brainsway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brainsway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Brainsway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aethlon Medical and Brainsway

The main advantage of trading using opposite Aethlon Medical and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aethlon Medical 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 Aethlon Medical 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.