Correlation Between CBrain AS and C WorldWide

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

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

Diversification Opportunities for CBrain AS and C WorldWide

0.39

Correlation Coefficient

CBrain AS  C WorldWide

Weak diversification

The 3 months correlation between CBrain and CWIGAKLA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and C WorldWide Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C WorldWide Globale 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 C WorldWide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C WorldWide Globale has no effect on the direction of CBrain AS i.e., CBrain AS and C WorldWide go up and down completely randomly.

Pair Corralation between CBrain AS and C WorldWide

Assuming the 90 days trading horizon cBrain AS is expected to generate 3.72 times more return on investment than C WorldWide. However, CBrain AS is 3.72 times more volatile than C WorldWide Globale. It trades about 0.07 of its potential returns per unit of risk. C WorldWide Globale is currently generating about 0.17 per unit of risk. If you would invest  19,500  in cBrain AS on September 5, 2024 and sell it today you would earn a total of  1,850  from holding cBrain AS or generate 9.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

cBrain AS  vs.  C WorldWide Globale

cBrain AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in cBrain AS are ranked lower than 5 (%) 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.

C WorldWide Globale

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in C WorldWide Globale are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite quite unfluctuating basic indicators, C WorldWide may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CBrain AS and C WorldWide

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

The idea behind cBrain AS and C WorldWide Globale 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..