Correlation Between BES Engineering and Continental Holdings
Can any of the company-specific risk be diversified away by investing in both BES Engineering and Continental Holdings 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 BES Engineering and Continental Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BES Engineering Co and Continental Holdings Corp, you can compare the effects of market volatilities on BES Engineering and Continental Holdings 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 BES Engineering with a short position of Continental Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Continental Holdings.
Diversification Opportunities for BES Engineering and Continental Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BES and Continental is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Continental Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Holdings Corp and BES Engineering 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 BES Engineering Co are associated (or correlated) with Continental Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Holdings Corp has no effect on the direction of BES Engineering i.e., BES Engineering and Continental Holdings go up and down completely randomly.
Pair Corralation between BES Engineering and Continental Holdings
Assuming the 90 days trading horizon BES Engineering Co is expected to under-perform the Continental Holdings. But the stock apears to be less risky and, when comparing its historical volatility, BES Engineering Co is 1.09 times less risky than Continental Holdings. The stock trades about -0.11 of its potential returns per unit of risk. The Continental Holdings Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 3,415 in Continental Holdings Corp on September 2, 2024 and sell it today you would lose (375.00) from holding Continental Holdings Corp or give up 10.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Continental Holdings Corp
Performance |
| Timeline |
| BES Engineering |
| Continental Holdings Corp |
BES Engineering and Continental Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Continental Holdings
The main advantage of trading using opposite BES Engineering and Continental Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering position performs unexpectedly, Continental Holdings 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 Continental Holdings will offset losses from the drop in Continental Holdings' long position.| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
| Continental Holdings vs. BES Engineering Co | Continental Holdings vs. Chien Kuo Construction | Continental Holdings vs. Hung Sheng Construction | Continental Holdings vs. YungShin Global Holding |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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