Correlation Between TECO Electric and UPC Technology
Can any of the company-specific risk be diversified away by investing in both TECO Electric and UPC Technology 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 UPC Technology 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 UPC Technology Corp, you can compare the effects of market volatilities on TECO Electric and UPC Technology 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 UPC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and UPC Technology.
Diversification Opportunities for TECO Electric and UPC Technology
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TECO and UPC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and UPC Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPC Technology Corp 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 UPC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPC Technology Corp has no effect on the direction of TECO Electric i.e., TECO Electric and UPC Technology go up and down completely randomly.
Pair Corralation between TECO Electric and UPC Technology
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 1.28 times more return on investment than UPC Technology. However, TECO Electric is 1.28 times more volatile than UPC Technology Corp. It trades about 0.05 of its potential returns per unit of risk. UPC Technology Corp is currently generating about -0.06 per unit of risk. If you would invest 3,490 in TECO Electric Machinery on November 30, 2024 and sell it today you would earn a total of 1,960 from holding TECO Electric Machinery or generate 56.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
TECO Electric Machinery vs. UPC Technology Corp
Performance |
| Timeline |
| TECO Electric Machinery |
| UPC Technology Corp |
TECO Electric and UPC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and UPC Technology
The main advantage of trading using opposite TECO Electric and UPC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, UPC Technology 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 UPC Technology will offset losses from the drop in UPC Technology's long position.| TECO Electric vs. Walsin Lihwa Corp | TECO Electric vs. Far Eastern New | TECO Electric vs. Nan Ya Plastics | TECO Electric vs. Taiwan Cement Corp |
| UPC Technology vs. USI Corp | UPC Technology vs. Taiwan Styrene Monomer | UPC Technology vs. Asia Polymer Corp | UPC Technology vs. Grand Pacific Petrochemical |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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