Correlation Between TECO Electric and Taiwan Hon
Can any of the company-specific risk be diversified away by investing in both TECO Electric and Taiwan Hon 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 Taiwan Hon 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 Taiwan Hon Chuan, you can compare the effects of market volatilities on TECO Electric and Taiwan Hon 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 Taiwan Hon. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO Electric and Taiwan Hon.
Diversification Opportunities for TECO Electric and Taiwan Hon
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Taiwan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Taiwan Hon Chuan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Hon Chuan 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 Taiwan Hon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Hon Chuan has no effect on the direction of TECO Electric i.e., TECO Electric and Taiwan Hon go up and down completely randomly.
Pair Corralation between TECO Electric and Taiwan Hon
Assuming the 90 days trading horizon TECO Electric is expected to generate 1.25 times less return on investment than Taiwan Hon. In addition to that, TECO Electric is 1.22 times more volatile than Taiwan Hon Chuan. It trades about 0.03 of its total potential returns per unit of risk. Taiwan Hon Chuan is currently generating about 0.05 per unit of volatility. If you would invest 12,400 in Taiwan Hon Chuan on September 12, 2024 and sell it today you would earn a total of 2,150 from holding Taiwan Hon Chuan or generate 17.34% 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. Taiwan Hon Chuan
Performance |
| Timeline |
| TECO Electric Machinery |
| Taiwan Hon Chuan |
TECO Electric and Taiwan Hon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO Electric and Taiwan Hon
The main advantage of trading using opposite TECO Electric and Taiwan Hon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO Electric position performs unexpectedly, Taiwan Hon 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 Taiwan Hon will offset losses from the drop in Taiwan Hon's long position.| TECO Electric vs. Yang Ming Marine | TECO Electric vs. Wan Hai Lines | TECO Electric vs. U Ming Marine Transport | TECO Electric vs. Taiwan Navigation Co |
| Taiwan Hon vs. Tainan Spinning Co | Taiwan Hon vs. Lealea Enterprise Co | Taiwan Hon vs. China Petrochemical Development | Taiwan Hon vs. Ruentex Development Co |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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