Correlation Between Samart Digital and Castle Peak

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

By analyzing existing cross correlation between Samart Digital Public and Castle Peak Holdings, you can compare the effects of market volatilities on Samart Digital and Castle Peak 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 Samart Digital with a short position of Castle Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samart Digital and Castle Peak.

Diversification Opportunities for Samart Digital and Castle Peak

-0.77

Correlation Coefficient

Samart Digital  Castle Peak

Pay attention - limited upside

The 3 months correlation between Samart and Castle is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Samart Digital Public and Castle Peak Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Peak Holdings and Samart Digital 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 Samart Digital Public are associated (or correlated) with Castle Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castle Peak Holdings has no effect on the direction of Samart Digital i.e., Samart Digital and Castle Peak go up and down completely randomly.

Pair Corralation between Samart Digital and Castle Peak

Assuming the 90 days trading horizon Samart Digital Public is expected to under-perform the Castle Peak. In addition to that, Samart Digital is 3.64 times more volatile than Castle Peak Holdings. It trades about -0.1 of its total potential returns per unit of risk. Castle Peak Holdings is currently generating about -0.26 per unit of volatility. If you would invest  1,110  in Castle Peak Holdings on September 15, 2024 and sell it today you would lose (170.00) from holding Castle Peak Holdings or give up 15.32% of portfolio value over 90 days.

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

Samart Digital Public  vs.  Castle Peak Holdings

Samart Digital Public

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samart Digital Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Samart Digital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Castle Peak Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castle Peak Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Samart Digital and Castle Peak

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

The idea behind Samart Digital Public and Castle Peak Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..