Correlation Between Safe Bulkers and Castor Maritime

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

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

Diversification Opportunities for Safe Bulkers and Castor Maritime

-0.76

Correlation Coefficient

Safe Bulkers  Castor Maritime

Pay attention - limited upside

The 3 months correlation between Safe and Castor is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Castor Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castor Maritime and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Castor Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castor Maritime has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Castor Maritime go up and down completely randomly.

Pair Corralation between Safe Bulkers and Castor Maritime

Assuming the 90 days horizon Safe Bulkers is expected to generate 0.21 times more return on investment than Castor Maritime. However, Safe Bulkers is 4.74 times less risky than Castor Maritime. It trades about 0.05 of its potential returns per unit of risk. Castor Maritime is currently generating about -0.16 per unit of risk. If you would invest  2,511  in Safe Bulkers on September 2, 2024 and sell it today you would earn a total of  31.00  from holding Safe Bulkers or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.06%
Values	Daily Returns

Safe Bulkers  vs.  Castor Maritime

Safe Bulkers

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Safe Bulkers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 conflicting 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.

Pair Trading with Safe Bulkers and Castor Maritime

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

The idea behind Safe Bulkers and Castor Maritime 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.