Correlation Between Silver Castle and Orbit Technologies

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

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

Diversification Opportunities for Silver Castle and Orbit Technologies

-0.75

Correlation Coefficient

Silver Castle  Orbit Technologies

Pay attention - limited upside

The 3 months correlation between Silver and Orbit is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Silver Castle Holdings and Orbit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Technologies and Silver Castle 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 Silver Castle Holdings are associated (or correlated) with Orbit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Technologies has no effect on the direction of Silver Castle i.e., Silver Castle and Orbit Technologies go up and down completely randomly.

Pair Corralation between Silver Castle and Orbit Technologies

Assuming the 90 days trading horizon Silver Castle Holdings is expected to under-perform the Orbit Technologies. In addition to that, Silver Castle is 2.56 times more volatile than Orbit Technologies. It trades about -0.02 of its total potential returns per unit of risk. Orbit Technologies is currently generating about 0.1 per unit of volatility. If you would invest  291,000  in Orbit Technologies on December 30, 2024 and sell it today you would earn a total of  32,000  from holding Orbit Technologies or generate 11.0% return on investment over 90 days.

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

Silver Castle Holdings  vs.  Orbit Technologies

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.

Orbit Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbit Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Castle and Orbit Technologies

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

The idea behind Silver Castle Holdings and Orbit Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.