Correlation Between Artesian Resources and Cadiz Depositary

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

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

Diversification Opportunities for Artesian Resources and Cadiz Depositary

0.21

Correlation Coefficient

Artesian Resources  Cadiz Depositary

Modest diversification

The 3 months correlation between Artesian and Cadiz is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Artesian Resources and Cadiz Depositary Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadiz Depositary Shares and Artesian Resources 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 Artesian Resources are associated (or correlated) with Cadiz Depositary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadiz Depositary Shares has no effect on the direction of Artesian Resources i.e., Artesian Resources and Cadiz Depositary go up and down completely randomly.

Pair Corralation between Artesian Resources and Cadiz Depositary

Assuming the 90 days horizon Artesian Resources is expected to generate 1.78 times less return on investment than Cadiz Depositary. In addition to that, Artesian Resources is 1.57 times more volatile than Cadiz Depositary Shares. It trades about 0.05 of its total potential returns per unit of risk. Cadiz Depositary Shares is currently generating about 0.14 per unit of volatility. If you would invest  1,695  in Cadiz Depositary Shares on December 30, 2024 and sell it today you would earn a total of  155.00  from holding Cadiz Depositary Shares or generate 9.14% return on investment over 90 days.

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

Artesian Resources  vs.  Cadiz Depositary Shares

Artesian Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Artesian Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Artesian Resources is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Cadiz Depositary Shares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cadiz Depositary Shares are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Cadiz Depositary may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Artesian Resources and Cadiz Depositary

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

The idea behind Artesian Resources and Cadiz Depositary Shares 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.