Correlation Between Castellum and JM AB

Can any of the company-specific risk be diversified away by investing in both Castellum and JM 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 JM 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 JM AB, you can compare the effects of market volatilities on Castellum and JM 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 JM AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castellum and JM AB.

Diversification Opportunities for Castellum and JM AB

0.8

Correlation Coefficient

Castellum  JM AB

Very poor diversification

The 3 months correlation between Castellum and JM AB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Castellum AB and JM AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM 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 JM AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM AB has no effect on the direction of Castellum i.e., Castellum and JM AB go up and down completely randomly.

Pair Corralation between Castellum and JM AB

Assuming the 90 days trading horizon Castellum AB is expected to generate 0.79 times more return on investment than JM AB. However, Castellum AB is 1.27 times less risky than JM AB. It trades about -0.08 of its potential returns per unit of risk. JM AB is currently generating about -0.08 per unit of risk. If you would invest  13,975  in Castellum AB on August 31, 2024 and sell it today you would lose (1,115) from holding Castellum AB or give up 7.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Castellum AB  vs.  JM 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 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.

JM AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JM 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.

Pair Trading with Castellum and JM AB

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

The idea behind Castellum AB and JM 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.