Correlation Between Danske Invest and CBrain AS

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

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

Diversification Opportunities for Danske Invest and CBrain AS

0.3

Correlation Coefficient

Danske Invest  CBrain AS

Weak diversification

The 3 months correlation between Danske and CBrain is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest and cBrain AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cBrain AS and Danske Invest 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 Danske Invest are associated (or correlated) with CBrain AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cBrain AS has no effect on the direction of Danske Invest i.e., Danske Invest and CBrain AS go up and down completely randomly.

Pair Corralation between Danske Invest and CBrain AS

Assuming the 90 days trading horizon Danske Invest is expected to generate 0.1 times more return on investment than CBrain AS. However, Danske Invest is 10.11 times less risky than CBrain AS. It trades about -0.11 of its potential returns per unit of risk. cBrain AS is currently generating about -0.14 per unit of risk. If you would invest  9,456  in Danske Invest on December 2, 2024 and sell it today you would lose (258.00) from holding Danske Invest or give up 2.73% of portfolio value over 90 days.

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

Danske Invest   vs.  cBrain AS

Danske Invest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danske Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Danske Invest and CBrain AS

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

The idea behind Danske Invest and cBrain 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.