Correlation Between TECO Electric and Microtips Technology
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Microtips Technology 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 Microtips Technology 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 Microtips Technology, you can compare the effects of market volatilities on TECO Electric and Microtips Technology 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 Microtips Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Microtips Technology.
Diversification Opportunities for TECO Electric and Microtips Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Microtips is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology 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 Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of TECO Electric i.e., TECO Electric and Microtips Technology go up and down completely randomly.
Pair Corralation between TECO Electric and Microtips Technology
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 0.68 times more return on investment than Microtips Technology. However, TECO Electric Machinery is 1.46 times less risky than Microtips Technology. It trades about -0.01 of its potential returns per unit of risk. Microtips Technology is currently generating about -0.01 per unit of risk. If you would invest 5,540 in TECO Electric Machinery on October 13, 2024 and sell it today you would lose (240.00) from holding TECO Electric Machinery or give up 4.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Microtips Technology
Performance |
| Timeline |
| TECO Electric Machinery |
| Microtips Technology |
TECO Electric and Microtips Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Microtips Technology
The main advantage of trading using opposite TECO Electric and Microtips Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Microtips Technology 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 Microtips Technology will offset losses from the drop in Microtips Technology'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 |
| Microtips Technology vs. Information Technology Total | Microtips Technology vs. Kao Fong Machinery | Microtips Technology vs. Lihtai Construction Enterprise | Microtips Technology vs. TECO Electric Machinery |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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