Correlation Between Cadiz and Artesian Resources

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

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

Diversification Opportunities for Cadiz and Artesian Resources

-0.58

Correlation Coefficient

Cadiz  Artesian Resources

Excellent diversification

The 3 months correlation between Cadiz and Artesian is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Inc and Artesian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artesian Resources and Cadiz 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 Cadiz Inc are associated (or correlated) with Artesian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artesian Resources has no effect on the direction of Cadiz i.e., Cadiz and Artesian Resources go up and down completely randomly.

Pair Corralation between Cadiz and Artesian Resources

Given the investment horizon of 90 days Cadiz Inc is expected to under-perform the Artesian Resources. In addition to that, Cadiz is 2.65 times more volatile than Artesian Resources. It trades about -0.17 of its total potential returns per unit of risk. Artesian Resources is currently generating about 0.05 per unit of volatility. If you would invest  3,129  in Artesian Resources on December 29, 2024 and sell it today you would earn a total of  138.00  from holding Artesian Resources or generate 4.41% return on investment over 90 days.

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

Cadiz Inc  vs.  Artesian Resources

Cadiz Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadiz Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Artesian Resources

Risk-Adjusted Performance

Weak

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.

Pair Trading with Cadiz and Artesian Resources

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

The idea behind Cadiz Inc and Artesian 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.