Correlation Between Artesian Resources and Global Water

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

By analyzing existing cross correlation between Artesian Resources and Global Water Resources, you can compare the effects of market volatilities on Artesian Resources and Global Water 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 Global Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artesian Resources and Global Water.

Diversification Opportunities for Artesian Resources and Global Water

0.88

Correlation Coefficient

Artesian Resources  Global Water

Very poor diversification

The 3 months correlation between Artesian and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Artesian Resources and Global Water Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Water Resources 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 Global Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Water Resources has no effect on the direction of Artesian Resources i.e., Artesian Resources and Global Water go up and down completely randomly.

Pair Corralation between Artesian Resources and Global Water

Assuming the 90 days horizon Artesian Resources is expected to generate 0.89 times more return on investment than Global Water. However, Artesian Resources is 1.12 times less risky than Global Water. It trades about -0.09 of its potential returns per unit of risk. Global Water Resources is currently generating about -0.13 per unit of risk. If you would invest  3,399  in Artesian Resources on November 19, 2024 and sell it today you would lose (273.00) from holding Artesian Resources or give up 8.03% of portfolio value over 90 days.

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

Artesian Resources  vs.  Global Water Resources

Artesian Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artesian Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Global Water Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Water Resources 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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Artesian Resources and Global Water

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

The idea behind Artesian Resources and Global Water Resources 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.