Correlation Between Caravelle International and Castor Maritime

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

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

Diversification Opportunities for Caravelle International and Castor Maritime

0.65

Correlation Coefficient

Caravelle International  Castor Maritime

Poor diversification

The 3 months correlation between Caravelle and Castor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Caravelle International Group and Castor Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castor Maritime and Caravelle International 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 Caravelle International 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 Caravelle International i.e., Caravelle International and Castor Maritime go up and down completely randomly.

Pair Corralation between Caravelle International and Castor Maritime

Given the investment horizon of 90 days Caravelle International Group is expected to under-perform the Castor Maritime. In addition to that, Caravelle International is 4.27 times more volatile than Castor Maritime. It trades about -0.1 of its total potential returns per unit of risk. Castor Maritime is currently generating about -0.08 per unit of volatility. If you would invest  273.00  in Castor Maritime on December 29, 2024 and sell it today you would lose (36.00) from holding Castor Maritime or give up 13.19% of portfolio value over 90 days.

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

Caravelle International Group  vs.  Castor Maritime

Caravelle International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caravelle International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Caravelle International and Castor Maritime

The main advantage of trading using opposite Caravelle International and Castor Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caravelle International 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 Caravelle International 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.