Correlation Between Costamare and Caravelle International

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

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

Diversification Opportunities for Costamare and Caravelle International

0.06

Correlation Coefficient

Costamare  Caravelle International

Significant diversification

The 3 months correlation between Costamare and Caravelle is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Costamare and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International and Costamare 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 Costamare are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Costamare i.e., Costamare and Caravelle International go up and down completely randomly.

Pair Corralation between Costamare and Caravelle International

Given the investment horizon of 90 days Costamare is expected to under-perform the Caravelle International. But the stock apears to be less risky and, when comparing its historical volatility, Costamare is 5.84 times less risky than Caravelle International. The stock trades about -0.03 of its potential returns per unit of risk. The Caravelle International Group is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Caravelle International Group on September 14, 2024 and sell it today you would earn a total of  13.00  from holding Caravelle International Group or generate 41.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	17.46%
Values	Daily Returns

Costamare  vs.  Caravelle International Group

Costamare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Costamare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Costamare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Caravelle International

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Caravelle International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady fundamental indicators, Caravelle International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costamare and Caravelle International

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

The idea behind Costamare and Caravelle International Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.