Correlation Between Castellum and Wihlborgs Fastigheter

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

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

Diversification Opportunities for Castellum and Wihlborgs Fastigheter

0.58

Correlation Coefficient

Castellum  Wihlborgs Fastigheter

Very weak diversification

The 3 months correlation between Castellum and Wihlborgs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Castellum AB and Wihlborgs Fastigheter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wihlborgs Fastigheter and Castellum 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 Castellum AB are associated (or correlated) with Wihlborgs Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wihlborgs Fastigheter has no effect on the direction of Castellum i.e., Castellum and Wihlborgs Fastigheter go up and down completely randomly.

Pair Corralation between Castellum and Wihlborgs Fastigheter

Assuming the 90 days trading horizon Castellum AB is expected to under-perform the Wihlborgs Fastigheter. But the stock apears to be less risky and, when comparing its historical volatility, Castellum AB is 1.09 times less risky than Wihlborgs Fastigheter. The stock trades about -0.01 of its potential returns per unit of risk. The Wihlborgs Fastigheter AB is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  8,907  in Wihlborgs Fastigheter AB on March 20, 2024 and sell it today you would earn a total of  773.00  from holding Wihlborgs Fastigheter AB or generate 8.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	77.5%
Values	Daily Returns

Castellum AB  vs.  Wihlborgs Fastigheter AB

Castellum AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castellum AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Castellum is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Wihlborgs Fastigheter

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wihlborgs Fastigheter AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wihlborgs Fastigheter may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Castellum and Wihlborgs Fastigheter

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

The idea behind Castellum AB and Wihlborgs Fastigheter AB 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.