Correlation Between BioPorto and CBrain AS

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

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

Diversification Opportunities for BioPorto and CBrain AS

-0.28

Correlation Coefficient

BioPorto  CBrain AS

Very good diversification

The 3 months correlation between BioPorto and CBrain is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BioPorto and cBrain AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cBrain AS and BioPorto 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 BioPorto are associated (or correlated) with CBrain AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cBrain AS has no effect on the direction of BioPorto i.e., BioPorto and CBrain AS go up and down completely randomly.

Pair Corralation between BioPorto and CBrain AS

Assuming the 90 days trading horizon BioPorto is expected to under-perform the CBrain AS. But the stock apears to be less risky and, when comparing its historical volatility, BioPorto is 1.04 times less risky than CBrain AS. The stock trades about -0.13 of its potential returns per unit of risk. The cBrain AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  19,540  in cBrain AS on September 3, 2024 and sell it today you would earn a total of  1,260  from holding cBrain AS or generate 6.45% return on investment over 90 days.

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

BioPorto  vs.  cBrain AS

BioPorto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioPorto has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

cBrain AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in cBrain AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, CBrain AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BioPorto and CBrain AS

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

The idea behind BioPorto and cBrain AS 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.