Correlation Between TECO Electric and Pacific Construction
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Pacific Construction 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 Pacific Construction 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 Pacific Construction Co, you can compare the effects of market volatilities on TECO Electric and Pacific Construction 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 Pacific Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Pacific Construction.
Diversification Opportunities for TECO Electric and Pacific Construction
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TECO and Pacific is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Pacific Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Construction 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 Pacific Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Construction has no effect on the direction of TECO Electric i.e., TECO Electric and Pacific Construction go up and down completely randomly.
Pair Corralation between TECO Electric and Pacific Construction
Assuming the 90 days trading horizon TECO Electric Machinery is expected to under-perform the Pacific Construction. But the stock apears to be less risky and, when comparing its historical volatility, TECO Electric Machinery is 1.34 times less risky than Pacific Construction. The stock trades about -0.02 of its potential returns per unit of risk. The Pacific Construction Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,290 in Pacific Construction Co on September 1, 2024 and sell it today you would lose (95.00) from holding Pacific Construction Co or give up 7.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Pacific Construction Co
Performance |
| Timeline |
| TECO Electric Machinery |
| Pacific Construction |
TECO Electric and Pacific Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Pacific Construction
The main advantage of trading using opposite TECO Electric and Pacific Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Pacific Construction 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 Pacific Construction will offset losses from the drop in Pacific Construction'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 |
| Pacific Construction vs. Cathay Real Estate | Pacific Construction vs. Goldsun Building Materials | Pacific Construction vs. Kindom Construction Corp | Pacific Construction vs. Prince Housing Development |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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