Correlation Between CBrain AS and BioArctic

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

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

Diversification Opportunities for CBrain AS and BioArctic

-0.64

Correlation Coefficient

CBrain AS  BioArctic

Excellent diversification

The 3 months correlation between CBrain and BioArctic is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and BioArctic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioArctic AB 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 BioArctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioArctic AB has no effect on the direction of CBrain AS i.e., CBrain AS and BioArctic go up and down completely randomly.

Pair Corralation between CBrain AS and BioArctic

Assuming the 90 days trading horizon cBrain AS is expected to under-perform the BioArctic. But the stock apears to be less risky and, when comparing its historical volatility, cBrain AS is 1.22 times less risky than BioArctic. The stock trades about -0.15 of its potential returns per unit of risk. The BioArctic AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18,280  in BioArctic AB on December 4, 2024 and sell it today you would earn a total of  4,020  from holding BioArctic AB or generate 21.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

cBrain AS  vs.  BioArctic AB

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.

BioArctic AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BioArctic AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, BioArctic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBrain AS and BioArctic

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

The idea behind cBrain AS and BioArctic AB 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.