Correlation Between TECO Electric and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Merry Electronics 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 Merry Electronics 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 Merry Electronics Co, you can compare the effects of market volatilities on TECO Electric and Merry Electronics 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 Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Merry Electronics.
Diversification Opportunities for TECO Electric and Merry Electronics
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Merry is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics 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 Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of TECO Electric i.e., TECO Electric and Merry Electronics go up and down completely randomly.
Pair Corralation between TECO Electric and Merry Electronics
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 0.71 times more return on investment than Merry Electronics. However, TECO Electric Machinery is 1.4 times less risky than Merry Electronics. It trades about 0.24 of its potential returns per unit of risk. Merry Electronics Co is currently generating about -0.08 per unit of risk. If you would invest 4,855 in TECO Electric Machinery on August 26, 2024 and sell it today you would earn a total of 355.00 from holding TECO Electric Machinery or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Merry Electronics Co
Performance |
| Timeline |
| TECO Electric Machinery |
| Merry Electronics |
TECO Electric and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Merry Electronics
The main advantage of trading using opposite TECO Electric and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.| TECO Electric vs. Sunny Friend Environmental | TECO Electric vs. TTET Union Corp | TECO Electric vs. ECOVE Environment Corp | TECO Electric vs. Yulon Finance Corp |
| Merry Electronics vs. Hung Sheng Construction | Merry Electronics vs. Ruentex Engineering Construction | Merry Electronics vs. TECO Electric Machinery | Merry Electronics vs. China Construction Bank |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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