Correlation Between WNS Holdings and Castellum

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

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

Diversification Opportunities for WNS Holdings and Castellum

0.31

Correlation Coefficient

WNS Holdings  Castellum

Weak diversification

The 3 months correlation between WNS and Castellum is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding WNS Holdings and Castellum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum and WNS Holdings 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 WNS Holdings are associated (or correlated) with Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum has no effect on the direction of WNS Holdings i.e., WNS Holdings and Castellum go up and down completely randomly.

Pair Corralation between WNS Holdings and Castellum

Considering the 90-day investment horizon WNS Holdings is expected to generate 2.99 times less return on investment than Castellum. But when comparing it to its historical volatility, WNS Holdings is 3.2 times less risky than Castellum. It trades about 0.27 of its potential returns per unit of risk. Castellum is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Castellum on September 2, 2024 and sell it today you would earn a total of  6.00  from holding Castellum or generate 42.86% return on investment over 90 days.

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

WNS Holdings  vs.  Castellum

WNS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with WNS Holdings and Castellum

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

The idea behind WNS Holdings and Castellum 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.