Correlation Between Castellum and Intrum Justitia

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

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

Diversification Opportunities for Castellum and Intrum Justitia

-0.23

Correlation Coefficient

Castellum  Intrum Justitia

Very good diversification

The 3 months correlation between Castellum and Intrum is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Castellum AB and Intrum Justitia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrum Justitia 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 Intrum Justitia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrum Justitia AB has no effect on the direction of Castellum i.e., Castellum and Intrum Justitia go up and down completely randomly.

Pair Corralation between Castellum and Intrum Justitia

Assuming the 90 days trading horizon Castellum AB is expected to under-perform the Intrum Justitia. But the stock apears to be less risky and, when comparing its historical volatility, Castellum AB is 3.83 times less risky than Intrum Justitia. The stock trades about -0.1 of its potential returns per unit of risk. The Intrum Justitia AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,835  in Intrum Justitia AB on December 2, 2024 and sell it today you would earn a total of  127.00  from holding Intrum Justitia AB or generate 4.48% return on investment over 90 days.

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

Castellum AB  vs.  Intrum Justitia AB

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.

Intrum Justitia AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intrum Justitia AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intrum Justitia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Castellum and Intrum Justitia

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

The idea behind Castellum AB and Intrum Justitia 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.