Correlation Between Sure Tech and Brainsway

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

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

Diversification Opportunities for Sure Tech and Brainsway

-0.28

Correlation Coefficient

Sure Tech  Brainsway

Very good diversification

The 3 months correlation between Sure and Brainsway is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sure Tech Investments LP and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway and Sure Tech 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 Sure Tech Investments LP 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 Sure Tech i.e., Sure Tech and Brainsway go up and down completely randomly.

Pair Corralation between Sure Tech and Brainsway

Assuming the 90 days trading horizon Sure Tech is expected to generate 61.41 times less return on investment than Brainsway. But when comparing it to its historical volatility, Sure Tech Investments LP is 1.17 times less risky than Brainsway. It trades about 0.0 of its potential returns per unit of risk. Brainsway is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  145,000  in Brainsway on September 12, 2024 and sell it today you would earn a total of  35,300  from holding Brainsway or generate 24.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

Sure Tech Investments LP  vs.  Brainsway

Sure Tech Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sure Tech Investments LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sure Tech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brainsway

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brainsway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sure Tech and Brainsway

The main advantage of trading using opposite Sure Tech and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sure Tech 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 Sure Tech Investments LP 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .