Correlation Between Cantargia and Lipum AB

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

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

Diversification Opportunities for Cantargia and Lipum AB

-0.78

Correlation Coefficient

Cantargia  Lipum AB

Pay attention - limited upside

The 3 months correlation between Cantargia and Lipum is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cantargia AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Cantargia i.e., Cantargia and Lipum AB go up and down completely randomly.

Pair Corralation between Cantargia and Lipum AB

Assuming the 90 days trading horizon Cantargia AB is expected to under-perform the Lipum AB. In addition to that, Cantargia is 1.53 times more volatile than Lipum AB. It trades about -0.18 of its total potential returns per unit of risk. Lipum AB is currently generating about 0.12 per unit of volatility. If you would invest  1,170  in Lipum AB on September 12, 2024 and sell it today you would earn a total of  320.00  from holding Lipum AB or generate 27.35% return on investment over 90 days.

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

Cantargia AB  vs.  Lipum 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 unfluctuating 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.

Lipum AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lipum AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Lipum AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cantargia and Lipum AB

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

The idea behind Cantargia AB and Lipum 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.