Correlation Between Golden Ocean and Castor Maritime

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

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

Diversification Opportunities for Golden Ocean and Castor Maritime

0.26

Correlation Coefficient

Golden Ocean  Castor Maritime

Modest diversification

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

Pair Corralation between Golden Ocean and Castor Maritime

Given the investment horizon of 90 days Golden Ocean Group is expected to generate 1.25 times more return on investment than Castor Maritime. However, Golden Ocean is 1.25 times more volatile than Castor Maritime. It trades about -0.01 of its potential returns per unit of risk. Castor Maritime is currently generating about -0.04 per unit of risk. 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

Golden Ocean Group  vs.  Castor Maritime

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.

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.

Pair Trading with Golden Ocean and Castor Maritime

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

The idea behind Golden Ocean Group and Castor Maritime 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .