Correlation Between HMS Networks and Cantargia
Can any of the company-specific risk be diversified away by investing in both HMS Networks 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 HMS Networks and Cantargia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMS Networks AB and Cantargia AB, you can compare the effects of market volatilities on HMS Networks 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 HMS Networks with a short position of Cantargia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMS Networks and Cantargia.
Diversification Opportunities for HMS Networks and Cantargia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HMS and Cantargia is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding HMS Networks AB and Cantargia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantargia AB and HMS Networks 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 HMS Networks 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 HMS Networks i.e., HMS Networks and Cantargia go up and down completely randomly.
Pair Corralation between HMS Networks and Cantargia
Assuming the 90 days trading horizon HMS Networks AB is expected to generate 0.24 times more return on investment than Cantargia. However, HMS Networks AB is 4.23 times less risky than Cantargia. It trades about -0.1 of its potential returns per unit of risk. Cantargia AB is currently generating about -0.24 per unit of risk. If you would invest 40,300 in HMS Networks AB on August 30, 2024 and sell it today you would lose (1,760) from holding HMS Networks AB or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMS Networks AB vs. Cantargia AB
Performance |
| Timeline |
| HMS Networks AB |
| Cantargia AB |
HMS Networks and Cantargia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMS Networks and Cantargia
The main advantage of trading using opposite HMS Networks and Cantargia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMS Networks 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.| HMS Networks vs. Vitec Software Group | HMS Networks vs. Troax Group AB | HMS Networks vs. Addnode Group AB | HMS Networks vs. Lifco AB |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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