Correlation Between TRC Construction and Castle Peak

Can any of the company-specific risk be diversified away by investing in both TRC Construction and Castle Peak 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 TRC Construction and Castle Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRC Construction Public and Castle Peak Holdings, you can compare the effects of market volatilities on TRC Construction and Castle Peak 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 TRC Construction with a short position of Castle Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRC Construction and Castle Peak.

Diversification Opportunities for TRC Construction and Castle Peak

0.83

Correlation Coefficient

TRC Construction  Castle Peak

Very poor diversification

The 3 months correlation between TRC and Castle is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TRC Construction Public and Castle Peak Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Peak Holdings and TRC 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 TRC Construction Public are associated (or correlated) with Castle Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castle Peak Holdings has no effect on the direction of TRC Construction i.e., TRC Construction and Castle Peak go up and down completely randomly.

Pair Corralation between TRC Construction and Castle Peak

Assuming the 90 days trading horizon TRC Construction Public is expected to under-perform the Castle Peak. In addition to that, TRC Construction is 2.1 times more volatile than Castle Peak Holdings. It trades about -0.2 of its total potential returns per unit of risk. Castle Peak Holdings is currently generating about -0.12 per unit of volatility. If you would invest  985.00  in Castle Peak Holdings on December 1, 2024 and sell it today you would lose (165.00) from holding Castle Peak Holdings or give up 16.75% of portfolio value over 90 days.

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

TRC Construction Public  vs.  Castle Peak Holdings

TRC Construction Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRC Construction Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Castle Peak Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Castle Peak Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with TRC Construction and Castle Peak

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

The idea behind TRC Construction Public and Castle Peak Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.