Correlation Between Continental Holdings and Far Eastern
Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Far Eastern 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 Continental Holdings and Far Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Holdings Corp and Far Eastern New, you can compare the effects of market volatilities on Continental Holdings and Far Eastern 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 Continental Holdings with a short position of Far Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Far Eastern.
Diversification Opportunities for Continental Holdings and Far Eastern
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Continental and Far is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Far Eastern New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern New and Continental 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 Continental Holdings Corp are associated (or correlated) with Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern New has no effect on the direction of Continental Holdings i.e., Continental Holdings and Far Eastern go up and down completely randomly.
Pair Corralation between Continental Holdings and Far Eastern
Assuming the 90 days trading horizon Continental Holdings Corp is expected to generate 1.21 times more return on investment than Far Eastern. However, Continental Holdings is 1.21 times more volatile than Far Eastern New. It trades about 0.32 of its potential returns per unit of risk. Far Eastern New is currently generating about 0.29 per unit of risk. If you would invest 2,980 in Continental Holdings Corp on November 29, 2024 and sell it today you would earn a total of 190.00 from holding Continental Holdings Corp or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Holdings Corp vs. Far Eastern New
Performance |
| Timeline |
| Continental Holdings Corp |
| Far Eastern New |
Continental Holdings and Far Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Holdings and Far Eastern
The main advantage of trading using opposite Continental Holdings and Far Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Far Eastern 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 Far Eastern will offset losses from the drop in Far Eastern's long position.| Continental Holdings vs. BES Engineering Co | Continental Holdings vs. Chien Kuo Construction | Continental Holdings vs. Hung Sheng Construction | Continental Holdings vs. YungShin Global Holding |
| Far Eastern vs. Nan Ya Plastics | Far Eastern vs. Taiwan Cement Corp | Far Eastern vs. Formosa Plastics Corp | Far Eastern vs. Asia Cement Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |