CARANCAHUA BAY. Carancahua Bay, named for the Karankawa Indians, who at one time inhabited its shores, is an inlet of Matagorda Bay in extreme northeastern Calhoun County (at 28°'40 N, 96°'24 W). It is bounded on the north by Jackson County, and the Calhoun-Jackson county line extends through the bay. The Calhoun County community of Port Alto is on the west shore of the bay. Carancahua, a Jackson County community, is on the east shore.