Correlation Between Castellum and Usio

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

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

Diversification Opportunities for Castellum and Usio

0.33

Correlation Coefficient

Castellum  Usio

Weak diversification

The 3 months correlation between Castellum and Usio is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Castellum and Usio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usio Inc 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 Usio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usio Inc has no effect on the direction of Castellum i.e., Castellum and Usio go up and down completely randomly.

Pair Corralation between Castellum and Usio

Considering the 90-day investment horizon Castellum is expected to generate 2.9 times more return on investment than Usio. However, Castellum is 2.9 times more volatile than Usio Inc. It trades about 0.13 of its potential returns per unit of risk. Usio Inc is currently generating about 0.01 per unit of risk. If you would invest  17.00  in Castellum on September 3, 2024 and sell it today you would earn a total of  9.00  from holding Castellum or generate 52.94% return on investment over 90 days.

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

Castellum  vs.  Usio Inc

Castellum

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

Usio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Usio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Castellum and Usio

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

The idea behind Castellum and Usio Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..