Correlation Between Castellum and Indra Sistemas

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

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

Diversification Opportunities for Castellum and Indra Sistemas

-0.26

Correlation Coefficient

Castellum  Indra Sistemas

Very good diversification

The 3 months correlation between Castellum and Indra is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Castellum and Indra Sistemas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indra Sistemas SA 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 are associated (or correlated) with Indra Sistemas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indra Sistemas SA has no effect on the direction of Castellum i.e., Castellum and Indra Sistemas go up and down completely randomly.

Pair Corralation between Castellum and Indra Sistemas

Considering the 90-day investment horizon Castellum is expected to generate 19.44 times more return on investment than Indra Sistemas. However, Castellum is 19.44 times more volatile than Indra Sistemas SA. It trades about 0.21 of its potential returns per unit of risk. Indra Sistemas SA is currently generating about -0.1 per unit of risk. If you would invest  17.00  in Castellum on October 15, 2024 and sell it today you would earn a total of  87.00  from holding Castellum or generate 511.76% return on investment over 90 days.

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

Castellum  vs.  Indra Sistemas SA

Castellum

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

Indra Sistemas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indra Sistemas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic 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 Indra Sistemas

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

The idea behind Castellum and Indra Sistemas SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.