Correlation Between Epitomee Medical and Brainsway

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

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

Diversification Opportunities for Epitomee Medical and Brainsway

0.66

Correlation Coefficient

Epitomee Medical  Brainsway

Poor diversification

The 3 months correlation between Epitomee and Brainsway is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Epitomee Medical and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Epitomee 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 Epitomee 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 Epitomee Medical i.e., Epitomee Medical and Brainsway go up and down completely randomly.

Pair Corralation between Epitomee Medical and Brainsway

Assuming the 90 days trading horizon Epitomee Medical is expected to generate 2.42 times more return on investment than Brainsway. However, Epitomee Medical is 2.42 times more volatile than Brainsway. It trades about 0.05 of its potential returns per unit of risk. Brainsway is currently generating about 0.04 per unit of risk. If you would invest  88,740  in Epitomee Medical on September 29, 2024 and sell it today you would earn a total of  6,010  from holding Epitomee Medical or generate 6.77% return on investment over 90 days.

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

Epitomee Medical  vs.  Brainsway

Epitomee Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Epitomee Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Epitomee Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Brainsway

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 3 (%) 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 January 2025.

Pair Trading with Epitomee Medical and Brainsway

The main advantage of trading using opposite Epitomee Medical and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epitomee 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 Epitomee 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.