Correlation Between TECO Electric and Yonyu Plastics
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Yonyu Plastics 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 Yonyu Plastics 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 Yonyu Plastics Co, you can compare the effects of market volatilities on TECO Electric and Yonyu Plastics 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 Yonyu Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Yonyu Plastics.
Diversification Opportunities for TECO Electric and Yonyu Plastics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Yonyu is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Yonyu Plastics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yonyu Plastics 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 Yonyu Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yonyu Plastics has no effect on the direction of TECO Electric i.e., TECO Electric and Yonyu Plastics go up and down completely randomly.
Pair Corralation between TECO Electric and Yonyu Plastics
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 1.08 times more return on investment than Yonyu Plastics. However, TECO Electric is 1.08 times more volatile than Yonyu Plastics Co. It trades about 0.19 of its potential returns per unit of risk. Yonyu Plastics Co is currently generating about 0.18 per unit of risk. If you would invest 4,940 in TECO Electric Machinery on September 1, 2024 and sell it today you would earn a total of 370.00 from holding TECO Electric Machinery or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Yonyu Plastics Co
Performance |
| Timeline |
| TECO Electric Machinery |
| Yonyu Plastics |
TECO Electric and Yonyu Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Yonyu Plastics
The main advantage of trading using opposite TECO Electric and Yonyu Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Yonyu Plastics 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 Yonyu Plastics will offset losses from the drop in Yonyu Plastics' 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 |
| Yonyu Plastics vs. Basso Industry Corp | Yonyu Plastics vs. Chung Hsin Electric Machinery | Yonyu Plastics vs. TYC Brother Industrial | Yonyu Plastics vs. TECO Electric Machinery |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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