Correlation Between Fabege AB and Castellum

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

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

Diversification Opportunities for Fabege AB and Castellum

0.25

Correlation Coefficient

Fabege AB  Castellum

Modest diversification

The 3 months correlation between Fabege and Castellum is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fabege AB and Castellum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum AB and Fabege AB 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 Fabege AB are associated (or correlated) with Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum AB has no effect on the direction of Fabege AB i.e., Fabege AB and Castellum go up and down completely randomly.

Pair Corralation between Fabege AB and Castellum

Assuming the 90 days trading horizon Fabege AB is expected to generate 1.21 times more return on investment than Castellum. However, Fabege AB is 1.21 times more volatile than Castellum AB. It trades about 0.03 of its potential returns per unit of risk. Castellum AB is currently generating about -0.09 per unit of risk. If you would invest  8,443  in Fabege AB on November 29, 2024 and sell it today you would earn a total of  127.00  from holding Fabege AB or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.1%
Values	Daily Returns

Fabege AB  vs.  Castellum AB

Fabege AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fabege AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fabege AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Castellum AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Castellum AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fabege AB and Castellum

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

The idea behind Fabege AB and Castellum AB 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.