Correlation Between Shihlin Electric and TECO Electric
Can any of the company-specific risk be diversified away by investing in both Shihlin Electric and TECO Electric 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 Shihlin Electric and TECO Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shihlin Electric Engineering and TECO Electric Machinery, you can compare the effects of market volatilities on Shihlin Electric and TECO Electric 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 Shihlin Electric with a short position of TECO Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shihlin Electric and TECO Electric.
Diversification Opportunities for Shihlin Electric and TECO Electric
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shihlin and TECO is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shihlin Electric Engineering and TECO Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TECO Electric Machinery and Shihlin Electric 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 Shihlin Electric Engineering are associated (or correlated) with TECO Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TECO Electric Machinery has no effect on the direction of Shihlin Electric i.e., Shihlin Electric and TECO Electric go up and down completely randomly.
Pair Corralation between Shihlin Electric and TECO Electric
Assuming the 90 days trading horizon Shihlin Electric Engineering is expected to generate 1.63 times more return on investment than TECO Electric. However, Shihlin Electric is 1.63 times more volatile than TECO Electric Machinery. It trades about 0.04 of its potential returns per unit of risk. TECO Electric Machinery is currently generating about 0.01 per unit of risk. If you would invest 14,850 in Shihlin Electric Engineering on September 2, 2024 and sell it today you would earn a total of 5,000 from holding Shihlin Electric Engineering or generate 33.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shihlin Electric Engineering vs. TECO Electric Machinery
Performance |
| Timeline |
| Shihlin Electric Eng |
| TECO Electric Machinery |
Shihlin Electric and TECO Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shihlin Electric and TECO Electric
The main advantage of trading using opposite Shihlin Electric and TECO Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shihlin Electric position performs unexpectedly, TECO Electric 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 TECO Electric will offset losses from the drop in TECO Electric's long position.| Shihlin Electric vs. TECO Electric Machinery | Shihlin Electric vs. Walsin Lihwa Corp | Shihlin Electric vs. Formosa Taffeta Co | Shihlin Electric vs. Far Eastern New |
| TECO Electric vs. Walsin Lihwa Corp | TECO Electric vs. Far Eastern New | TECO Electric vs. Nan Ya Plastics | TECO Electric vs. Taiwan Cement Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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