Correlation Between Fastighets and Castellum

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

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

Diversification Opportunities for Fastighets and Castellum

0.62

Correlation Coefficient

Fastighets  Castellum

Poor diversification

The 3 months correlation between Fastighets and Castellum is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fastighets AB Balder and Castellum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum AB and Fastighets 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 Fastighets AB Balder are associated (or correlated) with Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum AB has no effect on the direction of Fastighets i.e., Fastighets and Castellum go up and down completely randomly.

Pair Corralation between Fastighets and Castellum

Assuming the 90 days trading horizon Fastighets AB Balder is expected to generate 1.3 times more return on investment than Castellum. However, Fastighets is 1.3 times more volatile than Castellum AB. It trades about 0.03 of its potential returns per unit of risk. Castellum AB is currently generating about -0.08 per unit of risk. If you would invest  8,150  in Fastighets AB Balder on September 2, 2024 and sell it today you would earn a total of  242.00  from holding Fastighets AB Balder or generate 2.97% return on investment over 90 days.

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

Fastighets AB Balder  vs.  Castellum AB

Fastighets AB Balder

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fastighets AB Balder are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Fastighets is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fastighets and Castellum

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

The idea behind Fastighets AB Balder and Castellum 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.