Correlation Between CBrain AS and IA Invest

Can any of the company-specific risk be diversified away by investing in both CBrain AS and IA 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 IA 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 IA Invest Advice, you can compare the effects of market volatilities on CBrain AS and IA 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 IA Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBrain AS and IA Invest.

Diversification Opportunities for CBrain AS and IA Invest

0.03

Correlation Coefficient

CBrain AS  IA Invest

Significant diversification

The 3 months correlation between CBrain and IAIACVF is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and IA Invest Advice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Invest Advice 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 IA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Invest Advice has no effect on the direction of CBrain AS i.e., CBrain AS and IA Invest go up and down completely randomly.

Pair Corralation between CBrain AS and IA Invest

Assuming the 90 days trading horizon CBrain AS is expected to generate 2.43 times less return on investment than IA Invest. In addition to that, CBrain AS is 3.48 times more volatile than IA Invest Advice. It trades about 0.01 of its total potential returns per unit of risk. IA Invest Advice is currently generating about 0.09 per unit of volatility. If you would invest  13,375  in IA Invest Advice on October 23, 2024 and sell it today you would earn a total of  638.00  from holding IA Invest Advice or generate 4.77% return on investment over 90 days.

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

cBrain AS  vs.  IA Invest Advice

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.

IA Invest Advice

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IA Invest Advice are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IA Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CBrain AS and IA Invest

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

The idea behind cBrain AS and IA Invest Advice 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.