Correlation Between TECO Electric and Baolong International
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Baolong International 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 Baolong International 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 Baolong International Co, you can compare the effects of market volatilities on TECO Electric and Baolong International 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 Baolong International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Baolong International.
Diversification Opportunities for TECO Electric and Baolong International
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TECO and Baolong is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Baolong International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baolong International 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 Baolong International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baolong International has no effect on the direction of TECO Electric i.e., TECO Electric and Baolong International go up and down completely randomly.
Pair Corralation between TECO Electric and Baolong International
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 2.35 times more return on investment than Baolong International. However, TECO Electric is 2.35 times more volatile than Baolong International Co. It trades about 0.07 of its potential returns per unit of risk. Baolong International Co is currently generating about -0.02 per unit of risk. If you would invest 2,785 in TECO Electric Machinery on September 3, 2024 and sell it today you would earn a total of 2,525 from holding TECO Electric Machinery or generate 90.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Baolong International Co
Performance |
| Timeline |
| TECO Electric Machinery |
| Baolong International |
TECO Electric and Baolong International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Baolong International
The main advantage of trading using opposite TECO Electric and Baolong International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Baolong International 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 Baolong International will offset losses from the drop in Baolong International'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 |
| Baolong International vs. Formosa Petrochemical Corp | Baolong International vs. Cathay Financial Holding |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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