Correlation Between Nexcom AS and CBrain AS

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

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

Diversification Opportunities for Nexcom AS and CBrain AS

-0.2

Correlation Coefficient

Nexcom AS  CBrain AS

Good diversification

The 3 months correlation between Nexcom and CBrain is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nexcom AS and cBrain AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cBrain AS and Nexcom 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 Nexcom AS 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 Nexcom AS i.e., Nexcom AS and CBrain AS go up and down completely randomly.

Pair Corralation between Nexcom AS and CBrain AS

Assuming the 90 days trading horizon Nexcom AS is expected to generate 1.21 times more return on investment than CBrain AS. However, Nexcom AS is 1.21 times more volatile than cBrain AS. It trades about 0.03 of its potential returns per unit of risk. cBrain AS is currently generating about -0.14 per unit of risk. If you would invest  438.00  in Nexcom AS on December 2, 2024 and sell it today you would earn a total of  12.00  from holding Nexcom AS or generate 2.74% return on investment over 90 days.

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

Nexcom AS  vs.  cBrain AS

Nexcom AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nexcom AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nexcom AS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Nexcom AS and CBrain AS

The main advantage of trading using opposite Nexcom AS and CBrain AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexcom AS 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 Nexcom AS 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.