Correlation Between TECO Electric and Tung Ho
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Tung Ho 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 Tung Ho 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 Tung Ho Steel, you can compare the effects of market volatilities on TECO Electric and Tung Ho 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 Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Tung Ho.
Diversification Opportunities for TECO Electric and Tung Ho
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Tung is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Tung Ho Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Steel 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 Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Steel has no effect on the direction of TECO Electric i.e., TECO Electric and Tung Ho go up and down completely randomly.
Pair Corralation between TECO Electric and Tung Ho
Assuming the 90 days trading horizon TECO Electric is expected to generate 11.74 times less return on investment than Tung Ho. In addition to that, TECO Electric is 1.68 times more volatile than Tung Ho Steel. It trades about 0.0 of its total potential returns per unit of risk. Tung Ho Steel is currently generating about 0.05 per unit of volatility. If you would invest 5,790 in Tung Ho Steel on August 31, 2024 and sell it today you would earn a total of 1,310 from holding Tung Ho Steel or generate 22.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
TECO Electric Machinery vs. Tung Ho Steel
Performance |
| Timeline |
| TECO Electric Machinery |
| Tung Ho Steel |
TECO Electric and Tung Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Tung Ho
The main advantage of trading using opposite TECO Electric and Tung Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Tung Ho 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 Tung Ho will offset losses from the drop in Tung Ho'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 |
| Tung Ho vs. Basso Industry Corp | Tung Ho vs. Chung Hsin Electric Machinery | Tung Ho vs. TYC Brother Industrial | Tung Ho 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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