Correlation Between TECO Electric and Mayer Steel
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Mayer Steel 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 Mayer Steel 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 Mayer Steel Pipe, you can compare the effects of market volatilities on TECO Electric and Mayer Steel 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 Mayer Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Mayer Steel.
Diversification Opportunities for TECO Electric and Mayer Steel
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TECO and Mayer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Mayer Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayer Steel Pipe 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 Mayer Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayer Steel Pipe has no effect on the direction of TECO Electric i.e., TECO Electric and Mayer Steel go up and down completely randomly.
Pair Corralation between TECO Electric and Mayer Steel
Assuming the 90 days trading horizon TECO Electric is expected to generate 1.9 times less return on investment than Mayer Steel. But when comparing it to its historical volatility, TECO Electric Machinery is 1.22 times less risky than Mayer Steel. It trades about 0.12 of its potential returns per unit of risk. Mayer Steel Pipe is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,805 in Mayer Steel Pipe on November 30, 2024 and sell it today you would earn a total of 295.00 from holding Mayer Steel Pipe or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.3% |
| Values | Daily Returns |
TECO Electric Machinery vs. Mayer Steel Pipe
Performance |
| Timeline |
| TECO Electric Machinery |
| Mayer Steel Pipe |
TECO Electric and Mayer Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Mayer Steel
The main advantage of trading using opposite TECO Electric and Mayer Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Mayer Steel 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 Mayer Steel will offset losses from the drop in Mayer Steel'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 |
| Mayer Steel vs. Hsin Kuang Steel | Mayer Steel vs. Chung Hung Steel | Mayer Steel vs. Tung Ho Steel | Mayer Steel vs. Feng Hsin Steel |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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