Correlation Between CBrain AS and Fundamental Invest

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

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

Diversification Opportunities for CBrain AS and Fundamental Invest

0.36

Correlation Coefficient

CBrain AS  Fundamental Invest

Weak diversification

The 3 months correlation between CBrain and Fundamental is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Fundamental Invest Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Invest Stock 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 Fundamental Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Invest Stock has no effect on the direction of CBrain AS i.e., CBrain AS and Fundamental Invest go up and down completely randomly.

Pair Corralation between CBrain AS and Fundamental Invest

Assuming the 90 days trading horizon cBrain AS is expected to generate 3.33 times more return on investment than Fundamental Invest. However, CBrain AS is 3.33 times more volatile than Fundamental Invest Stock. It trades about 0.01 of its potential returns per unit of risk. Fundamental Invest Stock is currently generating about -0.09 per unit of risk. If you would invest  20,100  in cBrain AS on October 23, 2024 and sell it today you would lose (160.00) from holding cBrain AS or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

cBrain AS  vs.  Fundamental Invest Stock

cBrain AS

Risk-Adjusted Performance

0 of 100

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.

Fundamental Invest Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundamental Invest Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Fundamental Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CBrain AS and Fundamental Invest

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

The idea behind cBrain AS and Fundamental Invest Stock 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 Commodity Directory module to find actively traded commodities issued by global exchanges.