Correlation Between Continental Holdings and Sun Sea

Can any of the company-specific risk be diversified away by investing in both Continental Holdings and Sun Sea 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 Sun Sea 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 Sun Sea Construction, you can compare the effects of market volatilities on Continental Holdings and Sun Sea 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 Sun Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Holdings and Sun Sea.

Diversification Opportunities for Continental Holdings and Sun Sea

0.09

Correlation Coefficient

Continental Holdings  Sun Sea

Significant diversification

The 3 months correlation between Continental and Sun is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Continental Holdings Corp and Sun Sea Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Sea 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 Sun Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Sea Construction has no effect on the direction of Continental Holdings i.e., Continental Holdings and Sun Sea go up and down completely randomly.

Pair Corralation between Continental Holdings and Sun Sea

Assuming the 90 days trading horizon Continental Holdings Corp is expected to under-perform the Sun Sea. But the stock apears to be less risky and, when comparing its historical volatility, Continental Holdings Corp is 1.09 times less risky than Sun Sea. The stock trades about -0.05 of its potential returns per unit of risk. The Sun Sea Construction is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,905  in Sun Sea Construction on December 30, 2024 and sell it today you would lose (85.00) from holding Sun Sea Construction or give up 4.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Continental Holdings Corp  vs.  Sun Sea Construction

Continental Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Continental Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Continental Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sun Sea Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Sea Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Sea is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Continental Holdings and Sun Sea

The main advantage of trading using opposite Continental Holdings and Sun Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Holdings position performs unexpectedly, Sun Sea 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 Sun Sea will offset losses from the drop in Sun Sea's long position.

The idea behind Continental Holdings Corp and Sun Sea Construction 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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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.