Correlation Between Cantargia and Terranet

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

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

Diversification Opportunities for Cantargia and Terranet

0.76

Correlation Coefficient

Cantargia  Terranet

Poor diversification

The 3 months correlation between Cantargia and Terranet is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cantargia AB and Terranet AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terranet AB 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 Terranet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terranet AB has no effect on the direction of Cantargia i.e., Cantargia and Terranet go up and down completely randomly.

Pair Corralation between Cantargia and Terranet

Assuming the 90 days trading horizon Cantargia AB is expected to under-perform the Terranet. But the stock apears to be less risky and, when comparing its historical volatility, Cantargia AB is 1.26 times less risky than Terranet. The stock trades about -0.17 of its potential returns per unit of risk. The Terranet AB is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Terranet AB on September 2, 2024 and sell it today you would lose (18.00) from holding Terranet AB or give up 52.94% 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.  Terranet 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 uncertain 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.

Terranet AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terranet AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cantargia and Terranet

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

The idea behind Cantargia AB and Terranet 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.