Correlation Between Castor Maritime and Cool

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

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

Diversification Opportunities for Castor Maritime and Cool

0.85

Correlation Coefficient

Castor Maritime  Cool

Very poor diversification

The 3 months correlation between Castor and Cool is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company and Castor Maritime 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 Castor Maritime are associated (or correlated) with Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of Castor Maritime i.e., Castor Maritime and Cool go up and down completely randomly.

Pair Corralation between Castor Maritime and Cool

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the Cool. But the stock apears to be less risky and, when comparing its historical volatility, Castor Maritime is 1.13 times less risky than Cool. The stock trades about -0.22 of its potential returns per unit of risk. The Cool Company is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  1,147  in Cool Company on October 7, 2024 and sell it today you would lose (315.00) from holding Cool Company or give up 27.46% of portfolio value over 90 days.

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

Castor Maritime  vs.  Cool Company

Castor Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castor Maritime 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cool Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cool Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Castor Maritime and Cool

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

The idea behind Castor Maritime and Cool Company 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.