Correlation Between CBrain AS and Jeudan

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

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

Diversification Opportunities for CBrain AS and Jeudan

0.47

Correlation Coefficient

CBrain AS  Jeudan

Very weak diversification

The 3 months correlation between CBrain and Jeudan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Jeudan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeudan 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 Jeudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeudan has no effect on the direction of CBrain AS i.e., CBrain AS and Jeudan go up and down completely randomly.

Pair Corralation between CBrain AS and Jeudan

Assuming the 90 days trading horizon cBrain AS is expected to generate 3.54 times more return on investment than Jeudan. However, CBrain AS is 3.54 times more volatile than Jeudan. It trades about 0.01 of its potential returns per unit of risk. Jeudan is currently generating about -0.05 per unit of risk. If you would invest  18,580  in cBrain AS on December 24, 2024 and sell it today you would lose (680.00) from holding cBrain AS or give up 3.66% of portfolio value over 90 days.

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

cBrain AS  vs.  Jeudan

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.

Jeudan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeudan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jeudan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CBrain AS and Jeudan

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

The idea behind cBrain AS and Jeudan 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.