Correlation Between Safe Bulkers and Castor Maritime

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

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

Diversification Opportunities for Safe Bulkers and Castor Maritime

-0.69

Correlation Coefficient

Safe Bulkers  Castor Maritime

Excellent diversification

The 3 months correlation between Safe and Castor is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Castor Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castor Maritime and Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers i.e., Safe Bulkers and Castor Maritime go up and down completely randomly.

Pair Corralation between Safe Bulkers and Castor Maritime

Allowing for the 90-day total investment horizon Safe Bulkers is expected to generate 0.82 times more return on investment than Castor Maritime. However, Safe Bulkers is 1.23 times less risky than Castor Maritime. It trades about 0.06 of its potential returns per unit of risk. Castor Maritime is currently generating about -0.07 per unit of risk. If you would invest  352.00  in Safe Bulkers on December 27, 2024 and sell it today you would earn a total of  22.00  from holding Safe Bulkers or generate 6.25% return on investment over 90 days.

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

Safe Bulkers  vs.  Castor Maritime

Safe Bulkers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Safe Bulkers may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Safe Bulkers and Castor Maritime

The main advantage of trading using opposite Safe Bulkers and Castor Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe Bulkers 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 Safe Bulkers 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.