Correlation Between AP Moeller and Castor Maritime

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

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

Diversification Opportunities for AP Moeller and Castor Maritime

-0.4

Correlation Coefficient

AP Moeller  Castor Maritime

Very good diversification

The 3 months correlation between AMKAF and Castor is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller and Castor Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castor Maritime and AP Moeller 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 AP Moeller are associated (or correlated) with Castor Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castor Maritime has no effect on the direction of AP Moeller i.e., AP Moeller and Castor Maritime go up and down completely randomly.

Pair Corralation between AP Moeller and Castor Maritime

Assuming the 90 days horizon AP Moeller is expected to generate 1.2 times more return on investment than Castor Maritime. However, AP Moeller is 1.2 times more volatile than Castor Maritime. It trades about -0.02 of its potential returns per unit of risk. Castor Maritime is currently generating about -0.08 per unit of risk. If you would invest  157,000  in AP Moeller on October 15, 2024 and sell it today you would lose (4,300) from holding AP Moeller or give up 2.74% of portfolio value over 90 days.

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

AP Moeller   vs.  Castor Maritime

AP Moeller

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AP Moeller may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Castor Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castor Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AP Moeller and Castor Maritime

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

The idea behind AP Moeller and Castor Maritime 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.