Correlation Between Bactiquant and CBrain AS

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

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

Diversification Opportunities for Bactiquant and CBrain AS

0.24

Correlation Coefficient

Bactiquant  CBrain AS

Modest diversification

The 3 months correlation between Bactiquant and CBrain is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bactiquant AS and cBrain AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cBrain AS and Bactiquant 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 Bactiquant 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 Bactiquant i.e., Bactiquant and CBrain AS go up and down completely randomly.

Pair Corralation between Bactiquant and CBrain AS

Assuming the 90 days trading horizon Bactiquant AS is expected to under-perform the CBrain AS. In addition to that, Bactiquant is 1.85 times more volatile than cBrain AS. It trades about -0.05 of its total potential returns per unit of risk. cBrain AS is currently generating about -0.01 per unit of volatility. If you would invest  20,000  in cBrain AS on September 16, 2024 and sell it today you would lose (680.00) from holding cBrain AS or give up 3.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bactiquant AS  vs.  cBrain AS

Bactiquant AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bactiquant AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

cBrain AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days cBrain AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CBrain AS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bactiquant and CBrain AS

The main advantage of trading using opposite Bactiquant and CBrain AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bactiquant 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 Bactiquant 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.