Correlation Between CBrain AS and Orphazyme

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

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

Diversification Opportunities for CBrain AS and Orphazyme

0.22

Correlation Coefficient

CBrain AS  Orphazyme

Modest diversification

The 3 months correlation between CBrain and Orphazyme is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Orphazyme AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orphazyme 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 Orphazyme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orphazyme AS has no effect on the direction of CBrain AS i.e., CBrain AS and Orphazyme go up and down completely randomly.

Pair Corralation between CBrain AS and Orphazyme

Assuming the 90 days trading horizon CBrain AS is expected to generate 2.13 times less return on investment than Orphazyme. But when comparing it to its historical volatility, cBrain AS is 1.57 times less risky than Orphazyme. It trades about 0.06 of its potential returns per unit of risk. Orphazyme AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  85,000  in Orphazyme AS on September 4, 2024 and sell it today you would earn a total of  13,000  from holding Orphazyme AS or generate 15.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

cBrain AS  vs.  Orphazyme AS

cBrain AS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in cBrain AS are ranked lower than 4 (%) 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.

Orphazyme AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orphazyme AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Orphazyme exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBrain AS and Orphazyme

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

The idea behind cBrain AS and Orphazyme 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.