Correlation Between CBrain AS and MapsPeople

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

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

Diversification Opportunities for CBrain AS and MapsPeople

-0.09

Correlation Coefficient

CBrain AS  MapsPeople

Good diversification

The 3 months correlation between CBrain and MapsPeople is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and MapsPeople AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MapsPeople AS 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 MapsPeople. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MapsPeople AS has no effect on the direction of CBrain AS i.e., CBrain AS and MapsPeople go up and down completely randomly.

Pair Corralation between CBrain AS and MapsPeople

Assuming the 90 days trading horizon cBrain AS is expected to generate 0.35 times more return on investment than MapsPeople. However, cBrain AS is 2.83 times less risky than MapsPeople. It trades about 0.04 of its potential returns per unit of risk. MapsPeople AS is currently generating about -0.02 per unit of risk. If you would invest  19,840  in cBrain AS on September 12, 2024 and sell it today you would earn a total of  860.00  from holding cBrain AS or generate 4.33% return on investment over 90 days.

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

cBrain AS  vs.  MapsPeople AS

cBrain AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in cBrain AS are ranked lower than 2 (%) 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.

MapsPeople AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MapsPeople AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CBrain AS and MapsPeople

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

The idea behind cBrain AS and MapsPeople AS 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.