Correlation Between CBrain AS and Alefarm Brewing

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

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

Diversification Opportunities for CBrain AS and Alefarm Brewing

-0.28

Correlation Coefficient

CBrain AS  Alefarm Brewing

Very good diversification

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

Pair Corralation between CBrain AS and Alefarm Brewing

Assuming the 90 days trading horizon cBrain AS is expected to under-perform the Alefarm Brewing. In addition to that, CBrain AS is 1.02 times more volatile than Alefarm Brewing AS. It trades about -0.15 of its total potential returns per unit of risk. Alefarm Brewing AS is currently generating about 0.04 per unit of volatility. If you would invest  148.00  in Alefarm Brewing AS on December 3, 2024 and sell it today you would earn a total of  6.00  from holding Alefarm Brewing AS or generate 4.05% return on investment over 90 days.

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

cBrain AS  vs.  Alefarm Brewing AS

cBrain AS

Risk-Adjusted Performance

Very Weak

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

Alefarm Brewing AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alefarm Brewing AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Alefarm Brewing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CBrain AS and Alefarm Brewing

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

The idea behind cBrain AS and Alefarm Brewing 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.