Correlation Between Castle Peak and TRC Construction
Can any of the company-specific risk be diversified away by investing in both Castle Peak and TRC Construction 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 Castle Peak and TRC Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castle Peak Holdings and TRC Construction Public, you can compare the effects of market volatilities on Castle Peak and TRC Construction 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 Castle Peak with a short position of TRC Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Peak and TRC Construction.
Diversification Opportunities for Castle Peak and TRC Construction
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Castle and TRC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Castle Peak Holdings and TRC Construction Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRC Construction Public and Castle Peak 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 Castle Peak Holdings are associated (or correlated) with TRC Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRC Construction Public has no effect on the direction of Castle Peak i.e., Castle Peak and TRC Construction go up and down completely randomly.
Pair Corralation between Castle Peak and TRC Construction
Assuming the 90 days trading horizon Castle Peak Holdings is expected to under-perform the TRC Construction. But the stock apears to be less risky and, when comparing its historical volatility, Castle Peak Holdings is 3.17 times less risky than TRC Construction. The stock trades about -0.49 of its potential returns per unit of risk. The TRC Construction Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 168.00 in TRC Construction Public on September 3, 2024 and sell it today you would lose (20.00) from holding TRC Construction Public or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castle Peak Holdings vs. TRC Construction Public
Performance |
| Timeline |
| Castle Peak Holdings |
| TRC Construction Public |
Castle Peak and TRC Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castle Peak and TRC Construction
The main advantage of trading using opposite Castle Peak and TRC Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castle Peak position performs unexpectedly, TRC Construction 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 TRC Construction will offset losses from the drop in TRC Construction's long position.| Castle Peak vs. Central Pattana Public | Castle Peak vs. CP ALL Public | Castle Peak vs. Bangkok Dusit Medical | Castle Peak vs. Airports of Thailand |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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