Correlation Between CBrain AS and Nexcom AS
Can any of the company-specific risk be diversified away by investing in both CBrain AS and Nexcom 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 CBrain AS and Nexcom AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cBrain AS and Nexcom AS, you can compare the effects of market volatilities on CBrain AS and Nexcom 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 CBrain AS with a short position of Nexcom AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBrain AS and Nexcom AS.
Diversification Opportunities for CBrain AS and Nexcom AS
Good diversification
The 3 months correlation between CBrain and Nexcom is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Nexcom AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexcom 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 Nexcom AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexcom AS has no effect on the direction of CBrain AS i.e., CBrain AS and Nexcom AS go up and down completely randomly.
Pair Corralation between CBrain AS and Nexcom AS
Assuming the 90 days trading horizon cBrain AS is expected to generate 0.41 times more return on investment than Nexcom AS. However, cBrain AS is 2.45 times less risky than Nexcom AS. It trades about 0.31 of its potential returns per unit of risk. Nexcom AS is currently generating about -0.01 per unit of risk. If you would invest 16,840 in cBrain AS on September 3, 2024 and sell it today you would earn a total of 3,960 from holding cBrain AS or generate 23.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
cBrain AS vs. Nexcom AS
Performance |
| Timeline |
| cBrain AS |
| Nexcom AS |
CBrain AS and Nexcom AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBrain AS and Nexcom AS
The main advantage of trading using opposite CBrain AS and Nexcom AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBrain AS position performs unexpectedly, Nexcom 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 Nexcom AS will offset losses from the drop in Nexcom AS's long position.| CBrain AS vs. ChemoMetec AS | CBrain AS vs. Ambu AS | CBrain AS vs. Genmab AS | CBrain AS vs. Zealand Pharma AS |
| Nexcom AS vs. Bactiquant AS | Nexcom AS vs. Penneo AS | Nexcom AS vs. Dataproces Group AS | Nexcom AS vs. DecideAct 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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