Correlation Between Transtema Group and Cantargia

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

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

Diversification Opportunities for Transtema Group and Cantargia

-0.51

Correlation Coefficient

Transtema Group  Cantargia

Excellent diversification

The 3 months correlation between Transtema and Cantargia is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Transtema Group AB and Cantargia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantargia AB and Transtema Group 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 Transtema Group 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 Transtema Group i.e., Transtema Group and Cantargia go up and down completely randomly.

Pair Corralation between Transtema Group and Cantargia

Assuming the 90 days trading horizon Transtema Group AB is expected to generate 0.58 times more return on investment than Cantargia. However, Transtema Group AB is 1.71 times less risky than Cantargia. It trades about -0.19 of its potential returns per unit of risk. Cantargia AB is currently generating about -0.2 per unit of risk. If you would invest  1,572  in Transtema Group AB on October 7, 2024 and sell it today you would lose (58.00) from holding Transtema Group AB or give up 3.69% of portfolio value over 90 days.

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

Transtema Group AB  vs.  Cantargia AB

Transtema Group AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transtema Group AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Transtema Group 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 Transtema Group and Cantargia

The main advantage of trading using opposite Transtema Group and Cantargia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transtema Group 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 Transtema Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.