Correlation Between Maj Invest and CBrain AS

Can any of the company-specific risk be diversified away by investing in both Maj 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 Maj 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 Maj Invest Glob and cBrain AS, you can compare the effects of market volatilities on Maj 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 Maj Invest with a short position of CBrain AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maj Invest and CBrain AS.

Diversification Opportunities for Maj Invest and CBrain AS

0.42

Correlation Coefficient

Maj Invest  CBrain AS

Very weak diversification

The 3 months correlation between Maj and CBrain is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest Glob and cBrain AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cBrain AS and Maj 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 Maj Invest Glob 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 Maj Invest i.e., Maj Invest and CBrain AS go up and down completely randomly.

Pair Corralation between Maj Invest and CBrain AS

Assuming the 90 days trading horizon Maj Invest Glob is expected to under-perform the CBrain AS. But the stock apears to be less risky and, when comparing its historical volatility, Maj Invest Glob is 2.63 times less risky than CBrain AS. The stock trades about -0.15 of its potential returns per unit of risk. The cBrain AS is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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	91.67%
Values	Daily Returns

Maj Invest Glob  vs.  cBrain AS

Maj Invest Glob

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maj Invest Glob has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Maj Invest and CBrain AS

The main advantage of trading using opposite Maj Invest and CBrain AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maj 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 Maj Invest Glob 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.