Correlation Between CBrain AS and Novabase SGPS

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

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

Diversification Opportunities for CBrain AS and Novabase SGPS

0.31

Correlation Coefficient

CBrain AS  Novabase SGPS

Weak diversification

The 3 months correlation between CBrain and Novabase is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Novabase SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novabase SGPS 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 Novabase SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novabase SGPS has no effect on the direction of CBrain AS i.e., CBrain AS and Novabase SGPS go up and down completely randomly.

Pair Corralation between CBrain AS and Novabase SGPS

Assuming the 90 days trading horizon cBrain AS is expected to generate 1.91 times more return on investment than Novabase SGPS. However, CBrain AS is 1.91 times more volatile than Novabase SGPS. It trades about 0.16 of its potential returns per unit of risk. Novabase SGPS is currently generating about -0.06 per unit of risk. If you would invest  17,020  in cBrain AS on April 24, 2025 and sell it today you would earn a total of  3,980  from holding cBrain AS or generate 23.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

cBrain AS  vs.  Novabase SGPS

cBrain AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in cBrain AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, CBrain AS sustained solid returns over the last few months and may actually be approaching a breakup point.

Novabase SGPS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Novabase SGPS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Novabase SGPS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBrain AS and Novabase SGPS

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

The idea behind cBrain AS and Novabase SGPS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.