Correlation Between CBrain AS and H Lundbeck
Can any of the company-specific risk be diversified away by investing in both CBrain AS and H Lundbeck 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 H Lundbeck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cBrain AS and H Lundbeck AS, you can compare the effects of market volatilities on CBrain AS and H Lundbeck 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 H Lundbeck. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBrain AS and H Lundbeck.
Diversification Opportunities for CBrain AS and H Lundbeck
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CBrain and HLUN-B is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and H Lundbeck AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H Lundbeck 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 H Lundbeck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H Lundbeck AS has no effect on the direction of CBrain AS i.e., CBrain AS and H Lundbeck go up and down completely randomly.
Pair Corralation between CBrain AS and H Lundbeck
Assuming the 90 days trading horizon CBrain AS is expected to generate 1.91 times less return on investment than H Lundbeck. In addition to that, CBrain AS is 1.86 times more volatile than H Lundbeck AS. It trades about 0.02 of its total potential returns per unit of risk. H Lundbeck AS is currently generating about 0.08 per unit of volatility. If you would invest 2,588 in H Lundbeck AS on August 26, 2024 and sell it today you would earn a total of 1,940 from holding H Lundbeck AS or generate 74.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
cBrain AS vs. H Lundbeck AS
Performance |
| Timeline |
| cBrain AS |
| H Lundbeck AS |
CBrain AS and H Lundbeck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBrain AS and H Lundbeck
The main advantage of trading using opposite CBrain AS and H Lundbeck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBrain AS position performs unexpectedly, H Lundbeck 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 H Lundbeck will offset losses from the drop in H Lundbeck's long position.| CBrain AS vs. ChemoMetec AS | CBrain AS vs. Ambu AS | CBrain AS vs. Genmab AS | CBrain AS vs. Zealand Pharma AS |
| H Lundbeck vs. H Lundbeck AS | H Lundbeck vs. GN Store Nord | H Lundbeck vs. FLSmidth Co | H Lundbeck vs. ALK Abell AS |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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