Correlation Between TECO Electric and Oriental Union
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Oriental Union 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 Oriental Union 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 Oriental Union Chemical, you can compare the effects of market volatilities on TECO Electric and Oriental Union 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 Oriental Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Oriental Union.
Diversification Opportunities for TECO Electric and Oriental Union
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Oriental is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Oriental Union Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Union Chemical 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 Oriental Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Union Chemical has no effect on the direction of TECO Electric i.e., TECO Electric and Oriental Union go up and down completely randomly.
Pair Corralation between TECO Electric and Oriental Union
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 1.43 times more return on investment than Oriental Union. However, TECO Electric is 1.43 times more volatile than Oriental Union Chemical. It trades about -0.01 of its potential returns per unit of risk. Oriental Union Chemical is currently generating about -0.03 per unit of risk. If you would invest 5,660 in TECO Electric Machinery on September 3, 2024 and sell it today you would lose (350.00) from holding TECO Electric Machinery or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Oriental Union Chemical
Performance |
| Timeline |
| TECO Electric Machinery |
| Oriental Union Chemical |
TECO Electric and Oriental Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Oriental Union
The main advantage of trading using opposite TECO Electric and Oriental Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Oriental Union 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 Oriental Union will offset losses from the drop in Oriental Union's long position.| TECO Electric vs. Universal Microelectronics Co | TECO Electric vs. AVerMedia Technologies | TECO Electric vs. Symtek Automation Asia | TECO Electric vs. WiseChip Semiconductor |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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