Correlation Between Castle Peak and Dynasty Ceramic

Can any of the company-specific risk be diversified away by investing in both Castle Peak and Dynasty Ceramic 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 Dynasty Ceramic 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 Dynasty Ceramic Public, you can compare the effects of market volatilities on Castle Peak and Dynasty Ceramic 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 Dynasty Ceramic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Peak and Dynasty Ceramic.

Diversification Opportunities for Castle Peak and Dynasty Ceramic

0.5

Correlation Coefficient

Castle Peak  Dynasty Ceramic

Very weak diversification

The 3 months correlation between Castle and Dynasty is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Castle Peak Holdings and Dynasty Ceramic Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynasty Ceramic 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 Dynasty Ceramic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynasty Ceramic Public has no effect on the direction of Castle Peak i.e., Castle Peak and Dynasty Ceramic go up and down completely randomly.

Pair Corralation between Castle Peak and Dynasty Ceramic

Assuming the 90 days trading horizon Castle Peak Holdings is expected to under-perform the Dynasty Ceramic. In addition to that, Castle Peak is 2.49 times more volatile than Dynasty Ceramic Public. It trades about -0.27 of its total potential returns per unit of risk. Dynasty Ceramic Public is currently generating about -0.08 per unit of volatility. If you would invest  192.00  in Dynasty Ceramic Public on September 15, 2024 and sell it today you would lose (12.00) from holding Dynasty Ceramic Public or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Castle Peak Holdings  vs.  Dynasty Ceramic Public

Castle Peak Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castle Peak Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dynasty Ceramic Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynasty Ceramic Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Dynasty Ceramic is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Castle Peak and Dynasty Ceramic

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

The idea behind Castle Peak Holdings and Dynasty Ceramic Public 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 CEOs Directory module to screen CEOs from public companies around the world.