Correlation Between Castellana Properties and All Iron

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

By analyzing existing cross correlation between Castellana Properties Socimi and All Iron Re, you can compare the effects of market volatilities on Castellana Properties and All Iron 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 Castellana Properties with a short position of All Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castellana Properties and All Iron.

Diversification Opportunities for Castellana Properties and All Iron

-0.25

Correlation Coefficient

Castellana Properties  All Iron

Very good diversification

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

Pair Corralation between Castellana Properties and All Iron

Assuming the 90 days trading horizon Castellana Properties Socimi is expected to generate 2.56 times more return on investment than All Iron. However, Castellana Properties is 2.56 times more volatile than All Iron Re. It trades about -0.01 of its potential returns per unit of risk. All Iron Re is currently generating about -0.02 per unit of risk. If you would invest  695.00  in Castellana Properties Socimi on December 30, 2024 and sell it today you would lose (10.00) from holding Castellana Properties Socimi or give up 1.44% of portfolio value over 90 days.

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

Castellana Properties Socimi  vs.  All Iron Re

Castellana Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Castellana Properties Socimi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Castellana Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

All Iron Re

Risk-Adjusted Performance

Very Weak

Over the last 90 days All Iron Re has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, All Iron is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Castellana Properties and All Iron

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

The idea behind Castellana Properties Socimi and All Iron Re 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.