Correlation Between TECO Electric and Sheng Yu
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Sheng Yu 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 Sheng Yu 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 Sheng Yu Steel, you can compare the effects of market volatilities on TECO Electric and Sheng Yu 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 Sheng Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Sheng Yu.
Diversification Opportunities for TECO Electric and Sheng Yu
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TECO and Sheng is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Sheng Yu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sheng Yu 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 Sheng Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sheng Yu Steel has no effect on the direction of TECO Electric i.e., TECO Electric and Sheng Yu go up and down completely randomly.
Pair Corralation between TECO Electric and Sheng Yu
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 2.49 times more return on investment than Sheng Yu. However, TECO Electric is 2.49 times more volatile than Sheng Yu Steel. It trades about 0.02 of its potential returns per unit of risk. Sheng Yu Steel is currently generating about -0.11 per unit of risk. If you would invest 5,310 in TECO Electric Machinery on October 30, 2024 and sell it today you would earn a total of 50.00 from holding TECO Electric Machinery or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Sheng Yu Steel
Performance |
| Timeline |
| TECO Electric Machinery |
| Sheng Yu Steel |
TECO Electric and Sheng Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Sheng Yu
The main advantage of trading using opposite TECO Electric and Sheng Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Sheng Yu 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 Sheng Yu will offset losses from the drop in Sheng Yu'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 |
| Sheng Yu vs. Yieh Phui Enterprise | Sheng Yu vs. Tung Ho Steel | Sheng Yu vs. Feng Hsin Steel | Sheng Yu vs. Chung Hung 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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