Correlation Between Continental Holdings and Te Chang
Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Te Chang 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 Te Chang 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 Te Chang Construction, you can compare the effects of market volatilities on Continental Holdings and Te Chang 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 Te Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Te Chang.
Diversification Opportunities for Continental Holdings and Te Chang
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Continental and 5511 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Te Chang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Te Chang Construction 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 Te Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Te Chang Construction has no effect on the direction of Continental Holdings i.e., Continental Holdings and Te Chang go up and down completely randomly.
Pair Corralation between Continental Holdings and Te Chang
Assuming the 90 days trading horizon Continental Holdings Corp is expected to generate 3.26 times more return on investment than Te Chang. However, Continental Holdings is 3.26 times more volatile than Te Chang Construction. It trades about 0.08 of its potential returns per unit of risk. Te Chang Construction is currently generating about -0.01 per unit of risk. If you would invest 2,930 in Continental Holdings Corp on September 3, 2024 and sell it today you would earn a total of 110.00 from holding Continental Holdings Corp or generate 3.75% 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. Te Chang Construction
Performance |
| Timeline |
| Continental Holdings Corp |
| Te Chang Construction |
Continental Holdings and Te Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Holdings and Te Chang
The main advantage of trading using opposite Continental Holdings and Te Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Te Chang 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 Te Chang will offset losses from the drop in Te Chang'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 |
| Te Chang vs. Ruentex Engineering Construction | Te Chang vs. Century Wind Power | Te Chang vs. BES Engineering Co | Te Chang vs. Da Cin Construction 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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