Correlation Between Continental Holdings and Eva Airways
Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Eva Airways 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 Eva Airways 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 Eva Airways Corp, you can compare the effects of market volatilities on Continental Holdings and Eva Airways 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 Eva Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Eva Airways.
Diversification Opportunities for Continental Holdings and Eva Airways
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Continental and Eva is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Eva Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eva Airways 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 Eva Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eva Airways Corp has no effect on the direction of Continental Holdings i.e., Continental Holdings and Eva Airways go up and down completely randomly.
Pair Corralation between Continental Holdings and Eva Airways
Assuming the 90 days trading horizon Continental Holdings is expected to generate 5.25 times less return on investment than Eva Airways. But when comparing it to its historical volatility, Continental Holdings Corp is 1.14 times less risky than Eva Airways. It trades about 0.01 of its potential returns per unit of risk. Eva Airways Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,805 in Eva Airways Corp on September 2, 2024 and sell it today you would earn a total of 1,350 from holding Eva Airways Corp or generate 48.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Holdings Corp vs. Eva Airways Corp
Performance |
| Timeline |
| Continental Holdings Corp |
| Eva Airways Corp |
Continental Holdings and Eva Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Holdings and Eva Airways
The main advantage of trading using opposite Continental Holdings and Eva Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Eva Airways 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 Eva Airways will offset losses from the drop in Eva Airways' 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 |
| Eva Airways vs. China Airlines | Eva Airways vs. Evergreen Marine Corp | Eva Airways vs. Yang Ming Marine | Eva Airways vs. China Steel 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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