Correlation Between CBrain AS and Nilfisk Holding

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

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

Diversification Opportunities for CBrain AS and Nilfisk Holding

-0.5

Correlation Coefficient

CBrain AS  Nilfisk Holding

Very good diversification

The 3 months correlation between CBrain and Nilfisk is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Nilfisk Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nilfisk Holding 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 Nilfisk Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nilfisk Holding AS has no effect on the direction of CBrain AS i.e., CBrain AS and Nilfisk Holding go up and down completely randomly.

Pair Corralation between CBrain AS and Nilfisk Holding

Assuming the 90 days trading horizon cBrain AS is expected to under-perform the Nilfisk Holding. In addition to that, CBrain AS is 1.41 times more volatile than Nilfisk Holding AS. It trades about -0.13 of its total potential returns per unit of risk. Nilfisk Holding AS is currently generating about 0.12 per unit of volatility. If you would invest  13,380  in Nilfisk Holding AS on March 13, 2024 and sell it today you would earn a total of  1,660  from holding Nilfisk Holding AS or generate 12.41% return on investment over 90 days.

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

cBrain AS  vs.  Nilfisk Holding AS

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 unsteady performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Nilfisk Holding AS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nilfisk Holding AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Nilfisk Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBrain AS and Nilfisk Holding

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

The idea behind cBrain AS and Nilfisk Holding 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.