Correlation Between Castles Technology and Evergreen Marine

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

By analyzing existing cross correlation between Castles Technology Co and Evergreen Marine Corp, you can compare the effects of market volatilities on Castles Technology and Evergreen Marine 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 Castles Technology with a short position of Evergreen Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castles Technology and Evergreen Marine.

Diversification Opportunities for Castles Technology and Evergreen Marine

-0.89

Correlation Coefficient

Castles Technology  Evergreen Marine

Pay attention - limited upside

The 3 months correlation between Castles and Evergreen is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Castles Technology Co and Evergreen Marine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Marine Corp and Castles Technology 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 Castles Technology Co are associated (or correlated) with Evergreen Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Marine Corp has no effect on the direction of Castles Technology i.e., Castles Technology and Evergreen Marine go up and down completely randomly.

Pair Corralation between Castles Technology and Evergreen Marine

Assuming the 90 days trading horizon Castles Technology Co is expected to under-perform the Evergreen Marine. In addition to that, Castles Technology is 1.19 times more volatile than Evergreen Marine Corp. It trades about -0.22 of its total potential returns per unit of risk. Evergreen Marine Corp is currently generating about 0.07 per unit of volatility. If you would invest  20,950  in Evergreen Marine Corp on September 25, 2024 and sell it today you would earn a total of  1,850  from holding Evergreen Marine Corp or generate 8.83% return on investment over 90 days.

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

Castles Technology Co  vs.  Evergreen Marine Corp

Castles Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castles Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Evergreen Marine Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Marine Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Evergreen Marine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Castles Technology and Evergreen Marine

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

The idea behind Castles Technology Co and Evergreen Marine Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.