Correlation Between TECO Electric and Great China
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Great China 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 Great China 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 Great China Metal, you can compare the effects of market volatilities on TECO Electric and Great China 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 Great China. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Great China.
Diversification Opportunities for TECO Electric and Great China
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TECO and Great is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Great China Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great China Metal 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 Great China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great China Metal has no effect on the direction of TECO Electric i.e., TECO Electric and Great China go up and down completely randomly.
Pair Corralation between TECO Electric and Great China
Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 3.85 times more return on investment than Great China. However, TECO Electric is 3.85 times more volatile than Great China Metal. It trades about 0.19 of its potential returns per unit of risk. Great China Metal is currently generating about 0.0 per unit of risk. If you would invest 4,940 in TECO Electric Machinery on September 1, 2024 and sell it today you would earn a total of 370.00 from holding TECO Electric Machinery or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO Electric Machinery vs. Great China Metal
Performance |
| Timeline |
| TECO Electric Machinery |
| Great China Metal |
TECO Electric and Great China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Great China
The main advantage of trading using opposite TECO Electric and Great China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Great China 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 Great China will offset losses from the drop in Great China'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 |
| Great China vs. Basso Industry Corp | Great China vs. Chung Hsin Electric Machinery | Great China vs. TYC Brother Industrial | Great China 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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