Correlation Between CBrain AS and Zealand Pharma
Can any of the company-specific risk be diversified away by investing in both CBrain AS and Zealand Pharma 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 Zealand Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cBrain AS and Zealand Pharma AS, you can compare the effects of market volatilities on CBrain AS and Zealand Pharma 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 Zealand Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBrain AS and Zealand Pharma.
Diversification Opportunities for CBrain AS and Zealand Pharma
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between CBrain and Zealand is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Zealand Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zealand Pharma 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 Zealand Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zealand Pharma AS has no effect on the direction of CBrain AS i.e., CBrain AS and Zealand Pharma go up and down completely randomly.
Pair Corralation between CBrain AS and Zealand Pharma
Assuming the 90 days trading horizon cBrain AS is expected to under-perform the Zealand Pharma. But the stock apears to be less risky and, when comparing its historical volatility, cBrain AS is 1.39 times less risky than Zealand Pharma. The stock trades about -0.02 of its potential returns per unit of risk. The Zealand Pharma AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 47,040 in Zealand Pharma AS on August 29, 2024 and sell it today you would earn a total of 25,260 from holding Zealand Pharma AS or generate 53.7% 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. Zealand Pharma AS
Performance |
| Timeline |
| cBrain AS |
| Zealand Pharma AS |
CBrain AS and Zealand Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBrain AS and Zealand Pharma
The main advantage of trading using opposite CBrain AS and Zealand Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBrain AS position performs unexpectedly, Zealand Pharma 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 Zealand Pharma will offset losses from the drop in Zealand Pharma's long position.| CBrain AS vs. ChemoMetec AS | CBrain AS vs. Ambu AS | CBrain AS vs. Genmab AS | CBrain AS vs. Zealand Pharma AS |
| Zealand Pharma vs. Bavarian Nordic | Zealand Pharma vs. Ambu AS | Zealand Pharma vs. Genmab AS | Zealand Pharma 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 Stocks Directory module to find actively traded stocks across global markets.
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