Correlation Between Heart Test and BrainsWay

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

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

Diversification Opportunities for Heart Test and BrainsWay

0.31

Correlation Coefficient

Heart Test  BrainsWay

Weak diversification

The 3 months correlation between Heart and BrainsWay is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Heart Test Laboratories and BrainsWay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrainsWay and Heart Test 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 Heart Test Laboratories 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 Heart Test i.e., Heart Test and BrainsWay go up and down completely randomly.

Pair Corralation between Heart Test and BrainsWay

Given the investment horizon of 90 days Heart Test is expected to generate 7.46 times less return on investment than BrainsWay. But when comparing it to its historical volatility, Heart Test Laboratories is 2.22 times less risky than BrainsWay. It trades about 0.04 of its potential returns per unit of risk. BrainsWay is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  210.00  in BrainsWay on September 21, 2024 and sell it today you would earn a total of  643.00  from holding BrainsWay or generate 306.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.07%
Values	Daily Returns

Heart Test Laboratories  vs.  BrainsWay

Heart Test Laboratories

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heart Test Laboratories are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Heart Test unveiled solid returns over the last few months and may actually be approaching a breakup point.

BrainsWay

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainsWay are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BrainsWay reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heart Test and BrainsWay

The main advantage of trading using opposite Heart Test and BrainsWay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heart Test 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 Heart Test Laboratories 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.