Correlation Between Cantargia and New Wave
Can any of the company-specific risk be diversified away by investing in both Cantargia and New Wave 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 New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cantargia AB and New Wave Group, you can compare the effects of market volatilities on Cantargia and New Wave 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 New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cantargia and New Wave.
Diversification Opportunities for Cantargia and New Wave
Very poor diversification
The 3 months correlation between Cantargia and New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cantargia AB and New Wave Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Group 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 New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Group has no effect on the direction of Cantargia i.e., Cantargia and New Wave go up and down completely randomly.
Pair Corralation between Cantargia and New Wave
Assuming the 90 days trading horizon Cantargia AB is expected to under-perform the New Wave. In addition to that, Cantargia is 2.88 times more volatile than New Wave Group. It trades about -0.25 of its total potential returns per unit of risk. New Wave Group is currently generating about -0.21 per unit of volatility. If you would invest 11,323 in New Wave Group on September 4, 2024 and sell it today you would lose (1,388) from holding New Wave Group or give up 12.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cantargia AB vs. New Wave Group
Performance |
| Timeline |
| Cantargia AB |
| New Wave Group |
Cantargia and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cantargia and New Wave
The main advantage of trading using opposite Cantargia and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cantargia position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.| Cantargia vs. Simris Alg AB | Cantargia vs. Immunovia publ AB | Cantargia vs. Sedana Medical AB | Cantargia vs. KABE Group AB |
| New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax Group AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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