Correlation Between Continental Holdings and Kaori Heat
Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Kaori Heat 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 Kaori Heat 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 Kaori Heat Treatment, you can compare the effects of market volatilities on Continental Holdings and Kaori Heat 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 Kaori Heat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Kaori Heat.
Diversification Opportunities for Continental Holdings and Kaori Heat
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Continental and Kaori is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Kaori Heat Treatment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaori Heat Treatment 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 Kaori Heat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaori Heat Treatment has no effect on the direction of Continental Holdings i.e., Continental Holdings and Kaori Heat go up and down completely randomly.
Pair Corralation between Continental Holdings and Kaori Heat
Assuming the 90 days trading horizon Continental Holdings is expected to generate 2.65 times less return on investment than Kaori Heat. But when comparing it to its historical volatility, Continental Holdings Corp is 1.62 times less risky than Kaori Heat. It trades about 0.09 of its potential returns per unit of risk. Kaori Heat Treatment is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 30,500 in Kaori Heat Treatment on September 2, 2024 and sell it today you would earn a total of 3,450 from holding Kaori Heat Treatment or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Holdings Corp vs. Kaori Heat Treatment
Performance |
| Timeline |
| Continental Holdings Corp |
| Kaori Heat Treatment |
Continental Holdings and Kaori Heat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Holdings and Kaori Heat
The main advantage of trading using opposite Continental Holdings and Kaori Heat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Kaori Heat 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 Kaori Heat will offset losses from the drop in Kaori Heat'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 |
| Kaori Heat vs. BES Engineering Co | Kaori Heat vs. Continental Holdings Corp | Kaori Heat vs. Kee Tai Properties | Kaori Heat 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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