Correlation Between Softronic and Cantargia

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

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

Diversification Opportunities for Softronic and Cantargia

-0.47

Correlation Coefficient

Softronic  Cantargia

Very good diversification

The 3 months correlation between Softronic and Cantargia is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Cantargia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantargia AB and Softronic 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 Softronic AB are associated (or correlated) with Cantargia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantargia AB has no effect on the direction of Softronic i.e., Softronic and Cantargia go up and down completely randomly.

Pair Corralation between Softronic and Cantargia

Assuming the 90 days trading horizon Softronic is expected to generate 1.87 times less return on investment than Cantargia. But when comparing it to its historical volatility, Softronic AB is 1.65 times less risky than Cantargia. It trades about 0.07 of its potential returns per unit of risk. Cantargia AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  172.00  in Cantargia AB on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Cantargia AB or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Softronic AB  vs.  Cantargia AB

Softronic AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Softronic AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Softronic is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Softronic and Cantargia

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

The idea behind Softronic AB and Cantargia 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.