Correlation Between Castor Maritime and Frontline

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

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

Diversification Opportunities for Castor Maritime and Frontline

0.86

Correlation Coefficient

Castor Maritime  Frontline

Very poor diversification

The 3 months correlation between Castor and Frontline is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline 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 Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Castor Maritime i.e., Castor Maritime and Frontline go up and down completely randomly.

Pair Corralation between Castor Maritime and Frontline

Given the investment horizon of 90 days Castor Maritime is expected to generate 14.84 times less return on investment than Frontline. In addition to that, Castor Maritime is 2.03 times more volatile than Frontline. It trades about 0.0 of its total potential returns per unit of risk. Frontline is currently generating about 0.05 per unit of volatility. If you would invest  1,064  in Frontline on October 12, 2024 and sell it today you would earn a total of  659.00  from holding Frontline or generate 61.94% return on investment over 90 days.

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

Castor Maritime  vs.  Frontline

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.

Frontline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontline 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 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.

Pair Trading with Castor Maritime and Frontline

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

The idea behind Castor Maritime and Frontline 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.