Correlation Between Castellum and Fastighets

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

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

Diversification Opportunities for Castellum and Fastighets

0.91

Correlation Coefficient

Castellum  Fastighets

Almost no diversification

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

Pair Corralation between Castellum and Fastighets

Assuming the 90 days trading horizon Castellum AB is expected to generate 0.67 times more return on investment than Fastighets. However, Castellum AB is 1.5 times less risky than Fastighets. It trades about -0.09 of its potential returns per unit of risk. Fastighets AB Balder is currently generating about -0.07 per unit of risk. If you would invest  12,900  in Castellum AB on November 29, 2024 and sell it today you would lose (870.00) from holding Castellum AB or give up 6.74% 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.  Fastighets AB Balder

Castellum AB

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fastighets AB Balder

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastighets AB Balder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Castellum and Fastighets

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

The idea behind Castellum AB and Fastighets AB Balder 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.