Correlation Between Cadiz Depositary and Artesian Resources

Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary 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 Depositary 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 Depositary Shares and Artesian Resources, you can compare the effects of market volatilities on Cadiz Depositary 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 Depositary with a short position of Artesian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and Artesian Resources.

Diversification Opportunities for Cadiz Depositary and Artesian Resources

0.19

Correlation Coefficient

Cadiz Depositary  Artesian Resources

Average diversification

The 3 months correlation between Cadiz and Artesian is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and Artesian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artesian Resources and Cadiz Depositary 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 Depositary Shares 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 Depositary i.e., Cadiz Depositary and Artesian Resources go up and down completely randomly.

Pair Corralation between Cadiz Depositary and Artesian Resources

Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 0.64 times more return on investment than Artesian Resources. However, Cadiz Depositary Shares is 1.57 times less risky than Artesian Resources. It trades about 0.14 of its potential returns per unit of risk. Artesian Resources is currently generating about 0.05 per unit of risk. If you would invest  1,695  in Cadiz Depositary Shares on December 29, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cadiz Depositary Shares  vs.  Artesian Resources

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.

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 Depositary and Artesian Resources

The main advantage of trading using opposite Cadiz Depositary and Artesian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary 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 Depositary Shares 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.