Correlation Between Castor Maritime and AP Mller

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

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

Diversification Opportunities for Castor Maritime and AP Mller

0.76

Correlation Coefficient

Castor Maritime  AP Mller

Poor diversification

The 3 months correlation between Castor and AMKBF is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and Castor Maritime 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 Castor Maritime are associated (or correlated) with AP Mller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Mller has no effect on the direction of Castor Maritime i.e., Castor Maritime and AP Mller go up and down completely randomly.

Pair Corralation between Castor Maritime and AP Mller

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the AP Mller. But the stock apears to be less risky and, when comparing its historical volatility, Castor Maritime is 1.02 times less risky than AP Mller. The stock trades about -0.05 of its potential returns per unit of risk. The AP Mller is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  177,296  in AP Mller on January 19, 2024 and sell it today you would lose (43,296) from holding AP Mller or give up 24.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Castor Maritime  vs.  AP Mller

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 uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

AP Mller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP Mller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Castor Maritime and AP Mller

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

The idea behind Castor Maritime and AP Mller 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.