Correlation Between Castor Maritime and Nordic American

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

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

Diversification Opportunities for Castor Maritime and Nordic American

0.93

Correlation Coefficient

Castor Maritime  Nordic American

Almost no diversification

The 3 months correlation between Castor and Nordic is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers 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 Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of Castor Maritime i.e., Castor Maritime and Nordic American go up and down completely randomly.

Pair Corralation between Castor Maritime and Nordic American

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the Nordic American. In addition to that, Castor Maritime is 1.23 times more volatile than Nordic American Tankers. It trades about -0.28 of its total potential returns per unit of risk. Nordic American Tankers is currently generating about -0.28 per unit of volatility. If you would invest  330.00  in Nordic American Tankers on September 27, 2024 and sell it today you would lose (78.00) from holding Nordic American Tankers or give up 23.64% of portfolio value over 90 days.

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

Castor Maritime  vs.  Nordic American Tankers

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.

Nordic American Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic American Tankers 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 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 Nordic American

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

The idea behind Castor Maritime and Nordic American Tankers 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.