Correlation Between Continental Holdings and Yem Chio
Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Yem Chio 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 Yem Chio 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 Yem Chio Co, you can compare the effects of market volatilities on Continental Holdings and Yem Chio 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 Yem Chio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Yem Chio.
Diversification Opportunities for Continental Holdings and Yem Chio
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Continental and Yem is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Yem Chio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yem Chio 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 Yem Chio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yem Chio has no effect on the direction of Continental Holdings i.e., Continental Holdings and Yem Chio go up and down completely randomly.
Pair Corralation between Continental Holdings and Yem Chio
Assuming the 90 days trading horizon Continental Holdings Corp is expected to generate 1.39 times more return on investment than Yem Chio. However, Continental Holdings is 1.39 times more volatile than Yem Chio Co. It trades about 0.33 of its potential returns per unit of risk. Yem Chio Co is currently generating about 0.16 per unit of risk. If you would invest 2,980 in Continental Holdings Corp on December 1, 2024 and sell it today you would earn a total of 205.00 from holding Continental Holdings Corp or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Holdings Corp vs. Yem Chio Co
Performance |
| Timeline |
| Continental Holdings Corp |
| Yem Chio |
Continental Holdings and Yem Chio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Holdings and Yem Chio
The main advantage of trading using opposite Continental Holdings and Yem Chio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Yem Chio 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 Yem Chio will offset losses from the drop in Yem Chio'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 |
| Yem Chio vs. USI Corp | Yem Chio vs. Asia Polymer Corp | Yem Chio vs. Sincere Navigation Corp | Yem Chio vs. Lealea Enterprise 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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