Correlation Between Oceanpal and Castor Maritime

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

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

Diversification Opportunities for Oceanpal and Castor Maritime

0.97

Correlation Coefficient

Oceanpal  Castor Maritime

Almost no diversification

The 3 months correlation between Oceanpal and Castor is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Oceanpal and Castor Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castor Maritime and Oceanpal 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 Oceanpal 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 Oceanpal i.e., Oceanpal and Castor Maritime go up and down completely randomly.

Pair Corralation between Oceanpal and Castor Maritime

Allowing for the 90-day total investment horizon Oceanpal is expected to generate 1.06 times more return on investment than Castor Maritime. However, Oceanpal is 1.06 times more volatile than Castor Maritime. It trades about -0.13 of its potential returns per unit of risk. Castor Maritime is currently generating about -0.22 per unit of risk. If you would invest  143.00  in Oceanpal on October 6, 2024 and sell it today you would lose (16.00) from holding Oceanpal or give up 11.19% of portfolio value over 90 days.

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

Oceanpal  vs.  Castor Maritime

Oceanpal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceanpal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Oceanpal and Castor Maritime

The main advantage of trading using opposite Oceanpal and Castor Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanpal 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 Oceanpal 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.