Correlation Between Brainsway and Aerodrome
Can any of the company-specific risk be diversified away by investing in both Brainsway and Aerodrome 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 Brainsway and Aerodrome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brainsway and Aerodrome Group, you can compare the effects of market volatilities on Brainsway and Aerodrome 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 Brainsway with a short position of Aerodrome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brainsway and Aerodrome.
Diversification Opportunities for Brainsway and Aerodrome
Very weak diversification
The 3 months correlation between Brainsway and Aerodrome is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Brainsway and Aerodrome Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Group and Brainsway 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 Brainsway are associated (or correlated) with Aerodrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Group has no effect on the direction of Brainsway i.e., Brainsway and Aerodrome go up and down completely randomly.
Pair Corralation between Brainsway and Aerodrome
Assuming the 90 days trading horizon Brainsway is expected to generate 0.62 times more return on investment than Aerodrome. However, Brainsway is 1.6 times less risky than Aerodrome. It trades about -0.03 of its potential returns per unit of risk. Aerodrome Group is currently generating about -0.33 per unit of risk. If you would invest 195,300 in Brainsway on September 4, 2024 and sell it today you would lose (5,400) from holding Brainsway or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brainsway vs. Aerodrome Group
Performance |
| Timeline |
| Brainsway |
| Aerodrome Group |
Brainsway and Aerodrome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brainsway and Aerodrome
The main advantage of trading using opposite Brainsway and Aerodrome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brainsway position performs unexpectedly, Aerodrome 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 Aerodrome will offset losses from the drop in Aerodrome's long position.| Brainsway vs. Suny Cellular Communication | Brainsway vs. IBI Mutual Funds | Brainsway vs. Silver Castle Holdings | Brainsway vs. Rapac Communication Infrastructure |
| Aerodrome vs. Libra Insurance | Aerodrome vs. Ilex Medical | Aerodrome vs. Clal Biotechnology Industries | Aerodrome vs. Computer Direct |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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