Correlation Between Castellum and AAK AB

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

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

Diversification Opportunities for Castellum and AAK AB

0.91

Correlation Coefficient

Castellum  AAK AB

Almost no diversification

The 3 months correlation between Castellum and AAK is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Castellum AB and AAK AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAK AB and Castellum 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 Castellum AB are associated (or correlated) with AAK AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAK AB has no effect on the direction of Castellum i.e., Castellum and AAK AB go up and down completely randomly.

Pair Corralation between Castellum and AAK AB

Assuming the 90 days trading horizon Castellum AB is expected to under-perform the AAK AB. But the stock apears to be less risky and, when comparing its historical volatility, Castellum AB is 1.09 times less risky than AAK AB. The stock trades about -0.18 of its potential returns per unit of risk. The AAK AB is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  33,140  in AAK AB on September 12, 2024 and sell it today you would lose (2,740) from holding AAK AB or give up 8.27% of portfolio value over 90 days.

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

Castellum AB  vs.  AAK AB

Castellum AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castellum AB 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AAK AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AAK AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Castellum and AAK AB

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

The idea behind Castellum AB and AAK 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.