Correlation Between CBrain AS and Isofol Medical

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

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

Diversification Opportunities for CBrain AS and Isofol Medical

-0.44

Correlation Coefficient

CBrain AS  Isofol Medical

Very good diversification

The 3 months correlation between CBrain and Isofol is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Isofol Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isofol Medical AB 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 Isofol Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isofol Medical AB has no effect on the direction of CBrain AS i.e., CBrain AS and Isofol Medical go up and down completely randomly.

Pair Corralation between CBrain AS and Isofol Medical

Assuming the 90 days trading horizon CBrain AS is expected to generate 4.43 times less return on investment than Isofol Medical. But when comparing it to its historical volatility, cBrain AS is 2.71 times less risky than Isofol Medical. It trades about 0.05 of its potential returns per unit of risk. Isofol Medical AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Isofol Medical AB on September 12, 2024 and sell it today you would earn a total of  166.00  from holding Isofol Medical AB or generate 291.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.7%
Values	Daily Returns

cBrain AS  vs.  Isofol Medical AB

cBrain AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in cBrain AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, CBrain AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Isofol Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CBrain AS and Isofol Medical

The main advantage of trading using opposite CBrain AS and Isofol Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBrain AS position performs unexpectedly, Isofol Medical 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 Isofol Medical will offset losses from the drop in Isofol Medical's long position.

The idea behind cBrain AS and Isofol Medical AB 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..