Correlation Between Holmes Place and Castro

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

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

Diversification Opportunities for Holmes Place and Castro

-0.12

Correlation Coefficient

Holmes Place  Castro

Good diversification

The 3 months correlation between Holmes and Castro is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Holmes Place International and Castro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castro and Holmes Place 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 Holmes Place International are associated (or correlated) with Castro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castro has no effect on the direction of Holmes Place i.e., Holmes Place and Castro go up and down completely randomly.

Pair Corralation between Holmes Place and Castro

Assuming the 90 days trading horizon Holmes Place International is expected to generate 0.51 times more return on investment than Castro. However, Holmes Place International is 1.95 times less risky than Castro. It trades about 0.04 of its potential returns per unit of risk. Castro is currently generating about -0.07 per unit of risk. If you would invest  67,882  in Holmes Place International on May 6, 2025 and sell it today you would earn a total of  1,548  from holding Holmes Place International or generate 2.28% return on investment over 90 days.

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

Holmes Place International  vs.  Castro

Holmes Place Interna

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Holmes Place International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Holmes Place is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Castro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Castro 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 Holmes Place and Castro

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

The idea behind Holmes Place International and Castro 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..