Correlation Between Gabather and Cantargia

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

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

Diversification Opportunities for Gabather and Cantargia

0.62

Correlation Coefficient

Gabather  Cantargia

Poor diversification

The 3 months correlation between Gabather and Cantargia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gabather AB and Cantargia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantargia AB and Gabather 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 Gabather AB are associated (or correlated) with Cantargia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantargia AB has no effect on the direction of Gabather i.e., Gabather and Cantargia go up and down completely randomly.

Pair Corralation between Gabather and Cantargia

Assuming the 90 days trading horizon Gabather AB is expected to generate 1.93 times more return on investment than Cantargia. However, Gabather is 1.93 times more volatile than Cantargia AB. It trades about 0.06 of its potential returns per unit of risk. Cantargia AB is currently generating about -0.25 per unit of risk. If you would invest  45.00  in Gabather AB on September 4, 2024 and sell it today you would lose (1.00) from holding Gabather AB or give up 2.22% of portfolio value over 90 days.

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

Gabather AB  vs.  Cantargia AB

Gabather AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gabather AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gabather is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Gabather and Cantargia

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

The idea behind Gabather AB and Cantargia 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.