Correlation Between Shape Robotics and CBrain AS

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

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

Diversification Opportunities for Shape Robotics and CBrain AS

0.79

Correlation Coefficient

Shape Robotics  CBrain AS

Poor diversification

The 3 months correlation between Shape and CBrain is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shape Robotics AS and cBrain AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cBrain AS and Shape Robotics 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 Shape Robotics 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 Shape Robotics i.e., Shape Robotics and CBrain AS go up and down completely randomly.

Pair Corralation between Shape Robotics and CBrain AS

Assuming the 90 days trading horizon Shape Robotics AS is expected to under-perform the CBrain AS. In addition to that, Shape Robotics is 1.91 times more volatile than cBrain AS. It trades about -0.16 of its total potential returns per unit of risk. cBrain AS is currently generating about 0.16 per unit of volatility. If you would invest  29,100  in cBrain AS on March 5, 2024 and sell it today you would earn a total of  1,550  from holding cBrain AS or generate 5.33% return on investment over 90 days.

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

Shape Robotics AS  vs.  cBrain AS

Shape Robotics AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shape Robotics AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 forward 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 Shape Robotics and CBrain AS

The main advantage of trading using opposite Shape Robotics and CBrain AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shape Robotics 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 Shape Robotics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.