Correlation Between TECO Electric and Century Wind
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Century Wind 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 Century Wind 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 Century Wind Power, you can compare the effects of market volatilities on TECO Electric and Century Wind 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 Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Century Wind.
Diversification Opportunities for TECO Electric and Century Wind
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Century is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power 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 Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of TECO Electric i.e., TECO Electric and Century Wind go up and down completely randomly.
Pair Corralation between TECO Electric and Century Wind
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 0.95 times more return on investment than Century Wind. However, TECO Electric Machinery is 1.05 times less risky than Century Wind. It trades about 0.03 of its potential returns per unit of risk. Century Wind Power is currently generating about -0.52 per unit of risk. If you would invest 5,200 in TECO Electric Machinery on October 16, 2024 and sell it today you would earn a total of 50.00 from holding TECO Electric Machinery or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Century Wind Power
Performance |
| Timeline |
| TECO Electric Machinery |
| Century Wind Power |
TECO Electric and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Century Wind
The main advantage of trading using opposite TECO Electric and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind'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 |
| Century Wind vs. ANJI Technology Co | Century Wind vs. Taichung Commercial Bank | Century Wind vs. Taishin Financial Holding | Century Wind vs. China Development Financial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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