Correlation Between Apiam Animal and Brainchip Holdings

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

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

Diversification Opportunities for Apiam Animal and Brainchip Holdings

0.06

Correlation Coefficient

Apiam Animal  Brainchip Holdings

Significant diversification

The 3 months correlation between Apiam and Brainchip is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Apiam Animal Health and Brainchip Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainchip Holdings and Apiam Animal 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 Apiam Animal Health are associated (or correlated) with Brainchip Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainchip Holdings has no effect on the direction of Apiam Animal i.e., Apiam Animal and Brainchip Holdings go up and down completely randomly.

Pair Corralation between Apiam Animal and Brainchip Holdings

Assuming the 90 days trading horizon Apiam Animal Health is expected to under-perform the Brainchip Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Apiam Animal Health is 1.93 times less risky than Brainchip Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Brainchip Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Brainchip Holdings on September 27, 2024 and sell it today you would earn a total of  12.00  from holding Brainchip Holdings or generate 60.0% return on investment over 90 days.

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

Apiam Animal Health  vs.  Brainchip Holdings

Apiam Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apiam Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Brainchip Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brainchip Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Brainchip Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apiam Animal and Brainchip Holdings

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

The idea behind Apiam Animal Health and Brainchip Holdings 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.