Correlation Between TECO Electric and Shihlin Electric
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Shihlin 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 TECO Electric and Shihlin Electric 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 Shihlin Electric Engineering, you can compare the effects of market volatilities on TECO Electric and Shihlin 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 TECO Electric with a short position of Shihlin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Shihlin Electric.
Diversification Opportunities for TECO Electric and Shihlin Electric
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TECO and Shihlin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Shihlin Electric Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shihlin Electric Eng 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 Shihlin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shihlin Electric Eng has no effect on the direction of TECO Electric i.e., TECO Electric and Shihlin Electric go up and down completely randomly.
Pair Corralation between TECO Electric and Shihlin Electric
Assuming the 90 days trading horizon TECO Electric is expected to generate 4.59 times less return on investment than Shihlin Electric. But when comparing it to its historical volatility, TECO Electric Machinery is 1.63 times less risky than Shihlin Electric. It trades about 0.01 of its potential returns per unit of risk. Shihlin Electric Engineering is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
TECO Electric Machinery vs. Shihlin Electric Engineering
Performance |
| Timeline |
| TECO Electric Machinery |
| Shihlin Electric Eng |
TECO Electric and Shihlin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Shihlin Electric
The main advantage of trading using opposite TECO Electric and Shihlin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Shihlin 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 Shihlin Electric will offset losses from the drop in Shihlin Electric'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 |
| Shihlin Electric vs. TECO Electric Machinery | Shihlin Electric vs. Walsin Lihwa Corp | Shihlin Electric vs. Formosa Taffeta Co | Shihlin Electric vs. Far Eastern New |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |