Correlation Between Castor Maritime and DHT Holdings

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

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

Diversification Opportunities for Castor Maritime and DHT Holdings

0.85

Correlation Coefficient

Castor Maritime  DHT Holdings

Very poor diversification

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

Pair Corralation between Castor Maritime and DHT Holdings

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the DHT Holdings. In addition to that, Castor Maritime is 1.62 times more volatile than DHT Holdings. It trades about -0.29 of its total potential returns per unit of risk. DHT Holdings is currently generating about -0.16 per unit of volatility. If you would invest  1,001  in DHT Holdings on September 26, 2024 and sell it today you would lose (73.00) from holding DHT Holdings or give up 7.29% 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.  DHT Holdings

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 uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DHT Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DHT Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Castor Maritime and DHT Holdings

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

The idea behind Castor Maritime and DHT Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.