Correlation Between Castle Peak and Crown Seal
Can any of the company-specific risk be diversified away by investing in both Castle Peak and Crown Seal 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 Castle Peak and Crown Seal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castle Peak Holdings and Crown Seal Public, you can compare the effects of market volatilities on Castle Peak and Crown Seal 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 Castle Peak with a short position of Crown Seal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Peak and Crown Seal.
Diversification Opportunities for Castle Peak and Crown Seal
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Castle and Crown is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Castle Peak Holdings and Crown Seal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Seal Public and Castle Peak 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 Castle Peak Holdings are associated (or correlated) with Crown Seal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Seal Public has no effect on the direction of Castle Peak i.e., Castle Peak and Crown Seal go up and down completely randomly.
Pair Corralation between Castle Peak and Crown Seal
Assuming the 90 days trading horizon Castle Peak Holdings is expected to under-perform the Crown Seal. In addition to that, Castle Peak is 3.53 times more volatile than Crown Seal Public. It trades about -0.49 of its total potential returns per unit of risk. Crown Seal Public is currently generating about 0.03 per unit of volatility. If you would invest 4,575 in Crown Seal Public on September 3, 2024 and sell it today you would earn a total of 25.00 from holding Crown Seal Public or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castle Peak Holdings vs. Crown Seal Public
Performance |
| Timeline |
| Castle Peak Holdings |
| Crown Seal Public |
Castle Peak and Crown Seal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castle Peak and Crown Seal
The main advantage of trading using opposite Castle Peak and Crown Seal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castle Peak position performs unexpectedly, Crown Seal 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 Crown Seal will offset losses from the drop in Crown Seal's long position.| Castle Peak vs. Central Pattana Public | Castle Peak vs. CP ALL Public | Castle Peak vs. Bangkok Dusit Medical | Castle Peak vs. Airports of Thailand |
| Crown Seal vs. MFC Industrial Investment | Crown Seal vs. Siam Wellness Group | Crown Seal vs. Digital Telecommunications Infrastructure | Crown Seal vs. Bumrungrad Hospital Public |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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