Correlation Between Continental Holdings and Tong Tai
Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Tong Tai 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 Tong Tai 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 Tong Tai Machine Tool, you can compare the effects of market volatilities on Continental Holdings and Tong Tai 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 Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Tong Tai.
Diversification Opportunities for Continental Holdings and Tong Tai
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Continental and Tong is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine 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 Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Continental Holdings i.e., Continental Holdings and Tong Tai go up and down completely randomly.
Pair Corralation between Continental Holdings and Tong Tai
Assuming the 90 days trading horizon Continental Holdings is expected to generate 34.31 times less return on investment than Tong Tai. But when comparing it to its historical volatility, Continental Holdings Corp is 1.82 times less risky than Tong Tai. It trades about 0.0 of its potential returns per unit of risk. Tong Tai Machine Tool is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,655 in Tong Tai Machine Tool on August 31, 2024 and sell it today you would earn a total of 1,550 from holding Tong Tai Machine Tool or generate 93.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Continental Holdings Corp vs. Tong Tai Machine Tool
Performance |
| Timeline |
| Continental Holdings Corp |
| Tong Tai Machine |
Continental Holdings and Tong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Holdings and Tong Tai
The main advantage of trading using opposite Continental Holdings and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai's long position.| Continental Holdings vs. BES Engineering Co | Continental Holdings vs. Kee Tai Properties | Continental Holdings vs. Hung Sheng Construction |
| Tong Tai vs. BES Engineering Co | Tong Tai vs. Continental Holdings Corp | Tong Tai vs. Kee Tai Properties | Tong Tai vs. Hung Sheng Construction |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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