Correlation Between Castellum and Perficient

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

By analyzing existing cross correlation between Castellum and Perficient, you can compare the effects of market volatilities on Castellum and Perficient 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 Perficient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castellum and Perficient.

Diversification Opportunities for Castellum and Perficient

0.22

Correlation Coefficient

Castellum  Perficient

Modest diversification

The 3 months correlation between Castellum and Perficient is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Castellum and Perficient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perficient 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 Perficient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perficient has no effect on the direction of Castellum i.e., Castellum and Perficient go up and down completely randomly.

Pair Corralation between Castellum and Perficient

Considering the 90-day investment horizon Castellum is expected to generate 28.7 times more return on investment than Perficient. However, Castellum is 28.7 times more volatile than Perficient. It trades about 0.07 of its potential returns per unit of risk. Perficient is currently generating about 0.25 per unit of risk. If you would invest  17.00  in Castellum on September 1, 2024 and sell it today you would earn a total of  3.00  from holding Castellum or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	34.92%
Values	Daily Returns

Castellum  vs.  Perficient

Castellum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 5 (%) 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.

Perficient

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Perficient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Perficient is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Castellum and Perficient

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

The idea behind Castellum and Perficient 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.