Correlation Between TECO Electric and Basso Industry
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Basso Industry 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 Basso Industry 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 Basso Industry Corp, you can compare the effects of market volatilities on TECO Electric and Basso Industry 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 Basso Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Basso Industry.
Diversification Opportunities for TECO Electric and Basso Industry
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Basso is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Basso Industry Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basso Industry 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 Basso Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basso Industry Corp has no effect on the direction of TECO Electric i.e., TECO Electric and Basso Industry go up and down completely randomly.
Pair Corralation between TECO Electric and Basso Industry
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 0.93 times more return on investment than Basso Industry. However, TECO Electric Machinery is 1.07 times less risky than Basso Industry. It trades about 0.06 of its potential returns per unit of risk. Basso Industry Corp is currently generating about -0.1 per unit of risk. If you would invest 4,895 in TECO Electric Machinery on August 28, 2024 and sell it today you would earn a total of 245.00 from holding TECO Electric Machinery or generate 5.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Basso Industry Corp
Performance |
| Timeline |
| TECO Electric Machinery |
| Basso Industry Corp |
TECO Electric and Basso Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Basso Industry
The main advantage of trading using opposite TECO Electric and Basso Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Basso Industry 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 Basso Industry will offset losses from the drop in Basso Industry'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 |
| Basso Industry vs. Taiwan Semiconductor Manufacturing | Basso Industry vs. Hon Hai Precision | Basso Industry vs. MediaTek | Basso Industry vs. Chunghwa Telecom Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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