Correlation Between Cartesian Growth and SK Growth

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

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

Diversification Opportunities for Cartesian Growth and SK Growth

-0.9

Correlation Coefficient

Cartesian Growth  SK Growth

Pay attention - limited upside

The 3 months correlation between Cartesian and SKGR is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cartesian Growth and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities and Cartesian Growth 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 Cartesian Growth are associated (or correlated) with SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Cartesian Growth i.e., Cartesian Growth and SK Growth go up and down completely randomly.

Pair Corralation between Cartesian Growth and SK Growth

Assuming the 90 days horizon Cartesian Growth is expected to under-perform the SK Growth. In addition to that, Cartesian Growth is 14.68 times more volatile than SK Growth Opportunities. It trades about -0.01 of its total potential returns per unit of risk. SK Growth Opportunities is currently generating about -0.13 per unit of volatility. If you would invest  1,164  in SK Growth Opportunities on October 23, 2024 and sell it today you would lose (2.00) from holding SK Growth Opportunities or give up 0.17% of portfolio value over 90 days.

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

Cartesian Growth  vs.  SK Growth Opportunities

Cartesian Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cartesian Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

SK Growth Opportunities

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cartesian Growth and SK Growth

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

The idea behind Cartesian Growth and SK Growth Opportunities 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.