Correlation Between Continental Holdings and Goodway Machine
Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Goodway Machine 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 Goodway Machine 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 Goodway Machine Corp, you can compare the effects of market volatilities on Continental Holdings and Goodway Machine 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 Goodway Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Goodway Machine.
Diversification Opportunities for Continental Holdings and Goodway Machine
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Continental and Goodway is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Goodway Machine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodway Machine Corp 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 Goodway Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodway Machine Corp has no effect on the direction of Continental Holdings i.e., Continental Holdings and Goodway Machine go up and down completely randomly.
Pair Corralation between Continental Holdings and Goodway Machine
Assuming the 90 days trading horizon Continental Holdings Corp is expected to generate 1.49 times more return on investment than Goodway Machine. However, Continental Holdings is 1.49 times more volatile than Goodway Machine Corp. It trades about 0.01 of its potential returns per unit of risk. Goodway Machine Corp is currently generating about 0.01 per unit of risk. If you would invest 2,965 in Continental Holdings Corp on September 2, 2024 and sell it today you would earn a total of 75.00 from holding Continental Holdings Corp or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Continental Holdings Corp vs. Goodway Machine Corp
Performance |
| Timeline |
| Continental Holdings Corp |
| Goodway Machine Corp |
Continental Holdings and Goodway Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Holdings and Goodway Machine
The main advantage of trading using opposite Continental Holdings and Goodway Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Goodway Machine 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 Goodway Machine will offset losses from the drop in Goodway Machine'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 |
| Goodway Machine vs. Easywell Biomedicals | Goodway Machine vs. Louisa Professional Coffee | Goodway Machine vs. Great China Metal | Goodway Machine vs. Chailease Holding Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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