Correlation Between Castellum and Global Engine

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

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

Diversification Opportunities for Castellum and Global Engine

-0.46

Correlation Coefficient

Castellum  Global Engine

Very good diversification

The 3 months correlation between Castellum and Global is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Castellum and Global Engine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Engine Group and Castellum 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 Castellum are associated (or correlated) with Global Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Engine Group has no effect on the direction of Castellum i.e., Castellum and Global Engine go up and down completely randomly.

Pair Corralation between Castellum and Global Engine

Considering the 90-day investment horizon Castellum is expected to generate 1.1 times more return on investment than Global Engine. However, Castellum is 1.1 times more volatile than Global Engine Group. It trades about 0.16 of its potential returns per unit of risk. Global Engine Group is currently generating about -0.06 per unit of risk. If you would invest  17.00  in Castellum on September 12, 2024 and sell it today you would earn a total of  15.10  from holding Castellum or generate 88.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Castellum  vs.  Global Engine Group

Castellum

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

Global Engine Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Engine Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Castellum and Global Engine

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

The idea behind Castellum and Global Engine 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.