Correlation Between Pacific Basin and Castor Maritime
Can any of the company-specific risk be diversified away by investing in both Pacific Basin 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 Pacific Basin and Castor Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Basin Shipping and Castor Maritime, you can compare the effects of market volatilities on Pacific Basin 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 Pacific Basin with a short position of Castor Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and Castor Maritime.
Diversification Opportunities for Pacific Basin and Castor Maritime
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pacific and Castor is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and Castor Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castor Maritime and Pacific Basin 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 Pacific Basin Shipping 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 Pacific Basin i.e., Pacific Basin and Castor Maritime go up and down completely randomly.
Pair Corralation between Pacific Basin and Castor Maritime
Assuming the 90 days horizon Pacific Basin Shipping is expected to generate 0.31 times more return on investment than Castor Maritime. However, Pacific Basin Shipping is 3.18 times less risky than Castor Maritime. It trades about -0.23 of its potential returns per unit of risk. Castor Maritime is currently generating about -0.13 per unit of risk. If you would invest 21.00 in Pacific Basin Shipping on October 14, 2024 and sell it today you would lose (1.00) from holding Pacific Basin Shipping or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Basin Shipping vs. Castor Maritime
Performance |
| Timeline |
| Pacific Basin Shipping |
| Castor Maritime |
Pacific Basin and Castor Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Basin and Castor Maritime
The main advantage of trading using opposite Pacific Basin and Castor Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin 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.| Pacific Basin vs. American Shipping | Pacific Basin vs. EuroDry | Pacific Basin vs. Nippon Yusen Kabushiki | Pacific Basin vs. Euroseas |
| Castor Maritime vs. Seanergy Maritime Holdings | Castor Maritime vs. TOP Ships | Castor Maritime vs. United Maritime | Castor Maritime vs. Nordic American Tankers |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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