Correlation Between Castor Maritime and Golden Ocean

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

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

Diversification Opportunities for Castor Maritime and Golden Ocean

0.26

Correlation Coefficient

Castor Maritime  Golden Ocean

Modest diversification

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

Pair Corralation between Castor Maritime and Golden Ocean

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the Golden Ocean. But the stock apears to be less risky and, when comparing its historical volatility, Castor Maritime is 1.25 times less risky than Golden Ocean. The stock trades about -0.04 of its potential returns per unit of risk. The Golden Ocean Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  861.00  in Golden Ocean Group on December 28, 2024 and sell it today you would lose (47.00) from holding Golden Ocean Group or give up 5.46% of portfolio value over 90 days.

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

Castor Maritime  vs.  Golden Ocean Group

Castor Maritime

Risk-Adjusted Performance

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 very healthy basic indicators, Castor Maritime is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Golden Ocean Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Golden Ocean is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Castor Maritime and Golden Ocean

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

The idea behind Castor Maritime and Golden Ocean Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.