Correlation Between TECO Electric and Great Wall
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Great Wall 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 TECO Electric and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TECO Electric Machinery and Great Wall Enterprise, you can compare the effects of market volatilities on TECO Electric and Great Wall 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 TECO Electric with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Great Wall.
Diversification Opportunities for TECO Electric and Great Wall
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TECO and Great is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Great Wall Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Enterprise and TECO 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 TECO Electric Machinery are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Enterprise has no effect on the direction of TECO Electric i.e., TECO Electric and Great Wall go up and down completely randomly.
Pair Corralation between TECO Electric and Great Wall
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 0.95 times more return on investment than Great Wall. However, TECO Electric Machinery is 1.05 times less risky than Great Wall. It trades about 0.03 of its potential returns per unit of risk. Great Wall Enterprise is currently generating about -0.02 per unit of risk. If you would invest 5,340 in TECO Electric Machinery on November 5, 2024 and sell it today you would earn a total of 20.00 from holding TECO Electric Machinery or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Great Wall Enterprise
Performance |
| Timeline |
| TECO Electric Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Great Wall Enterprise |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
TECO Electric and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Great Wall
The main advantage of trading using opposite TECO Electric and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.The idea behind TECO Electric Machinery and Great Wall Enterprise 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.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |