Correlation Between Cantargia and Isofol Medical

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

By analyzing existing cross correlation between Cantargia AB and Isofol Medical AB, you can compare the effects of market volatilities on Cantargia and Isofol Medical 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 Isofol Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cantargia and Isofol Medical.

Diversification Opportunities for Cantargia and Isofol Medical

0.35

Correlation Coefficient

Cantargia  Isofol Medical

Weak diversification

The 3 months correlation between Cantargia and Isofol is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cantargia AB and Isofol Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isofol Medical AB 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 Isofol Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isofol Medical AB has no effect on the direction of Cantargia i.e., Cantargia and Isofol Medical go up and down completely randomly.

Pair Corralation between Cantargia and Isofol Medical

Assuming the 90 days trading horizon Cantargia AB is expected to under-perform the Isofol Medical. But the stock apears to be less risky and, when comparing its historical volatility, Cantargia AB is 2.44 times less risky than Isofol Medical. The stock trades about -0.13 of its potential returns per unit of risk. The Isofol Medical AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Isofol Medical AB on September 23, 2024 and sell it today you would earn a total of  169.00  from holding Isofol Medical AB or generate 238.03% return on investment over 90 days.

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

Cantargia AB  vs.  Isofol Medical AB

Cantargia AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cantargia AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Isofol Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Isofol Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Isofol Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cantargia and Isofol Medical

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

The idea behind Cantargia AB and Isofol Medical AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.