Correlation Between CBrain AS and Monsenso

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

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

Diversification Opportunities for CBrain AS and Monsenso

0.36

Correlation Coefficient

CBrain AS  Monsenso

Weak diversification

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

Pair Corralation between CBrain AS and Monsenso

Assuming the 90 days trading horizon cBrain AS is expected to generate 0.26 times more return on investment than Monsenso. However, cBrain AS is 3.78 times less risky than Monsenso. It trades about -0.26 of its potential returns per unit of risk. Monsenso AS is currently generating about -0.2 per unit of risk. If you would invest  20,300  in cBrain AS on September 23, 2024 and sell it today you would lose (2,020) from holding cBrain AS or give up 9.95% of portfolio value over 90 days.

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

cBrain AS  vs.  Monsenso AS

cBrain AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days cBrain AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Monsenso AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monsenso AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CBrain AS and Monsenso

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

The idea behind cBrain AS and Monsenso 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.