Correlation Between Cantargia and Proact IT
Can any of the company-specific risk be diversified away by investing in both Cantargia and Proact IT 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 Proact IT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cantargia AB and Proact IT Group, you can compare the effects of market volatilities on Cantargia and Proact IT 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 Proact IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cantargia and Proact IT.
Diversification Opportunities for Cantargia and Proact IT
Very poor diversification
The 3 months correlation between Cantargia and Proact is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cantargia AB and Proact IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proact IT 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 Proact IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proact IT Group has no effect on the direction of Cantargia i.e., Cantargia and Proact IT go up and down completely randomly.
Pair Corralation between Cantargia and Proact IT
Assuming the 90 days trading horizon Cantargia AB is expected to under-perform the Proact IT. In addition to that, Cantargia is 6.38 times more volatile than Proact IT Group. It trades about -0.23 of its total potential returns per unit of risk. Proact IT Group is currently generating about -0.39 per unit of volatility. If you would invest 14,480 in Proact IT Group on August 25, 2024 and sell it today you would lose (1,480) from holding Proact IT Group or give up 10.22% 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. Proact IT Group
Performance |
| Timeline |
| Cantargia AB |
| Proact IT Group |
Cantargia and Proact IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cantargia and Proact IT
The main advantage of trading using opposite Cantargia and Proact IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cantargia position performs unexpectedly, Proact IT 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 Proact IT will offset losses from the drop in Proact IT's long position.| Cantargia vs. Hansa Biopharma AB | Cantargia vs. Oncopeptides AB | Cantargia vs. BioArctic AB | Cantargia vs. Alligator Bioscience 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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