Correlation Between Consolidated Construction and Country Club
Can any of the company-specific risk be diversified away by investing in both Consolidated Construction and Country Club 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 Consolidated Construction and Country Club into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Construction Consortium and Country Club Hospitality, you can compare the effects of market volatilities on Consolidated Construction and Country Club 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 Consolidated Construction with a short position of Country Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and Country Club.
Diversification Opportunities for Consolidated Construction and Country Club
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consolidated and Country is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and Country Club Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Club Hospitality and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with Country Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Club Hospitality has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and Country Club go up and down completely randomly.
Pair Corralation between Consolidated Construction and Country Club
Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 8.19 times more return on investment than Country Club. However, Consolidated Construction is 8.19 times more volatile than Country Club Hospitality. It trades about 0.05 of its potential returns per unit of risk. Country Club Hospitality is currently generating about 0.07 per unit of risk. If you would invest 145.00 in Consolidated Construction Consortium on October 11, 2024 and sell it today you would earn a total of 1,693 from holding Consolidated Construction Consortium or generate 1167.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Consolidated Construction Cons vs. Country Club Hospitality
Performance |
| Timeline |
| Consolidated Construction |
| Country Club Hospitality |
Consolidated Construction and Country Club Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Construction and Country Club
The main advantage of trading using opposite Consolidated Construction and Country Club positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction position performs unexpectedly, Country Club 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 Country Club will offset losses from the drop in Country Club's long position.The idea behind Consolidated Construction Consortium and Country Club Hospitality pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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