Correlation Between Castor Maritime and Cheniere Energy

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

By analyzing existing cross correlation between Castor Maritime and Cheniere Energy Partners, you can compare the effects of market volatilities on Castor Maritime and Cheniere Energy 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 Castor Maritime with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castor Maritime and Cheniere Energy.

Diversification Opportunities for Castor Maritime and Cheniere Energy

-0.78

Correlation Coefficient

Castor Maritime  Cheniere Energy

Pay attention - limited upside

The 3 months correlation between Castor and Cheniere is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Castor Maritime 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 Castor Maritime are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Castor Maritime i.e., Castor Maritime and Cheniere Energy go up and down completely randomly.

Pair Corralation between Castor Maritime and Cheniere Energy

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the Cheniere Energy. In addition to that, Castor Maritime is 2.65 times more volatile than Cheniere Energy Partners. It trades about -0.02 of its total potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.04 per unit of volatility. If you would invest  4,646  in Cheniere Energy Partners on September 24, 2024 and sell it today you would earn a total of  576.00  from holding Cheniere Energy Partners or generate 12.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Castor Maritime  vs.  Cheniere Energy Partners

Castor Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castor Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cheniere Energy Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Castor Maritime and Cheniere Energy

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

The idea behind Castor Maritime and Cheniere Energy Partners 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.