Correlation Between Cantargia and Karolinska Development

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

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

Diversification Opportunities for Cantargia and Karolinska Development

0.79

Correlation Coefficient

Cantargia  Karolinska Development

Poor diversification

The 3 months correlation between Cantargia and Karolinska is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cantargia AB and Karolinska Development AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karolinska Development and Cantargia 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 Cantargia AB are associated (or correlated) with Karolinska Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karolinska Development has no effect on the direction of Cantargia i.e., Cantargia and Karolinska Development go up and down completely randomly.

Pair Corralation between Cantargia and Karolinska Development

Assuming the 90 days trading horizon Cantargia AB is expected to under-perform the Karolinska Development. In addition to that, Cantargia is 1.99 times more volatile than Karolinska Development AB. It trades about -0.16 of its total potential returns per unit of risk. Karolinska Development AB is currently generating about -0.06 per unit of volatility. If you would invest  122.00  in Karolinska Development AB on September 5, 2024 and sell it today you would lose (17.00) from holding Karolinska Development AB or give up 13.93% of portfolio value over 90 days.

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

Cantargia AB  vs.  Karolinska Development AB

Cantargia AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cantargia AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Karolinska Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karolinska Development AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cantargia and Karolinska Development

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

The idea behind Cantargia AB and Karolinska Development 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.