Correlation Between CBrain AS and TORM Plc
Can any of the company-specific risk be diversified away by investing in both CBrain AS and TORM Plc 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 TORM Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cBrain AS and TORM plc, you can compare the effects of market volatilities on CBrain AS and TORM Plc 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 TORM Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBrain AS and TORM Plc.
Diversification Opportunities for CBrain AS and TORM Plc
Modest diversification
The 3 months correlation between CBrain and TORM is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and TORM plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TORM plc 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 TORM Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TORM plc has no effect on the direction of CBrain AS i.e., CBrain AS and TORM Plc go up and down completely randomly.
Pair Corralation between CBrain AS and TORM Plc
Assuming the 90 days trading horizon cBrain AS is expected to generate 1.38 times more return on investment than TORM Plc. However, CBrain AS is 1.38 times more volatile than TORM plc. It trades about -0.1 of its potential returns per unit of risk. TORM plc is currently generating about -0.17 per unit of risk. If you would invest 30,650 in cBrain AS on August 29, 2024 and sell it today you would lose (10,730) from holding cBrain AS or give up 35.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
cBrain AS vs. TORM plc
Performance |
| Timeline |
| cBrain AS |
| TORM plc |
CBrain AS and TORM Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBrain AS and TORM Plc
The main advantage of trading using opposite CBrain AS and TORM Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBrain AS position performs unexpectedly, TORM Plc 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 TORM Plc will offset losses from the drop in TORM Plc's long position.| CBrain AS vs. ChemoMetec AS | CBrain AS vs. Ambu AS | CBrain AS vs. Genmab AS | CBrain AS vs. Zealand Pharma AS |
| TORM Plc vs. Dampskibsselskabet Norden AS | TORM Plc vs. FLSmidth Co | TORM Plc vs. Zealand Pharma AS | TORM Plc vs. NKT 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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