Correlation Between Multi Retail and Silver Castle

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

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

Diversification Opportunities for Multi Retail and Silver Castle

-0.2

Correlation Coefficient

Multi Retail  Silver Castle

Good diversification

The 3 months correlation between Multi and Silver is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Multi Retail Group and Silver Castle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Castle Holdings and Multi Retail 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 Multi Retail Group are associated (or correlated) with Silver Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Castle Holdings has no effect on the direction of Multi Retail i.e., Multi Retail and Silver Castle go up and down completely randomly.

Pair Corralation between Multi Retail and Silver Castle

Assuming the 90 days trading horizon Multi Retail Group is expected to generate 0.41 times more return on investment than Silver Castle. However, Multi Retail Group is 2.43 times less risky than Silver Castle. It trades about 0.12 of its potential returns per unit of risk. Silver Castle Holdings is currently generating about -0.02 per unit of risk. If you would invest  113,500  in Multi Retail Group on December 30, 2024 and sell it today you would earn a total of  15,800  from holding Multi Retail Group or generate 13.92% return on investment over 90 days.

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

Multi Retail Group  vs.  Silver Castle Holdings

Multi Retail Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Multi Retail sustained solid returns over the last few months and may actually be approaching a breakup point.

Silver Castle Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Castle Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Multi Retail and Silver Castle

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

The idea behind Multi Retail Group and Silver Castle 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.