Correlation Between CBrain AS and Bactiquant

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

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

Diversification Opportunities for CBrain AS and Bactiquant

-0.15

Correlation Coefficient

CBrain AS  Bactiquant

Good diversification

The 3 months correlation between CBrain and Bactiquant is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Bactiquant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiquant 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 Bactiquant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiquant AS has no effect on the direction of CBrain AS i.e., CBrain AS and Bactiquant go up and down completely randomly.

Pair Corralation between CBrain AS and Bactiquant

Assuming the 90 days trading horizon cBrain AS is expected to under-perform the Bactiquant. But the stock apears to be less risky and, when comparing its historical volatility, cBrain AS is 6.57 times less risky than Bactiquant. The stock trades about -0.02 of its potential returns per unit of risk. The Bactiquant AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  414.00  in Bactiquant AS on November 20, 2024 and sell it today you would lose (16.00) from holding Bactiquant AS or give up 3.86% of portfolio value over 90 days.

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

cBrain AS  vs.  Bactiquant 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 somewhat strong basic indicators, CBrain AS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bactiquant AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bactiquant AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Bactiquant sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBrain AS and Bactiquant

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

The idea behind cBrain AS and Bactiquant 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.