Correlation Between Hung Sheng and TECO Electric
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and TECO Electric 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 Hung Sheng and TECO Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hung Sheng Construction and TECO Electric Machinery, you can compare the effects of market volatilities on Hung Sheng and TECO Electric 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 Hung Sheng with a short position of TECO Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and TECO Electric.
Diversification Opportunities for Hung Sheng and TECO Electric
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hung and TECO is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and TECO Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TECO Electric Machinery and Hung Sheng 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 Hung Sheng Construction are associated (or correlated) with TECO Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TECO Electric Machinery has no effect on the direction of Hung Sheng i.e., Hung Sheng and TECO Electric go up and down completely randomly.
Pair Corralation between Hung Sheng and TECO Electric
Assuming the 90 days trading horizon Hung Sheng is expected to generate 2.29 times less return on investment than TECO Electric. But when comparing it to its historical volatility, Hung Sheng Construction is 1.09 times less risky than TECO Electric. It trades about 0.09 of its potential returns per unit of risk. TECO Electric Machinery is currently generating about 0.19 of returns per unit of risk over similar time horizon. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. TECO Electric Machinery
Performance |
| Timeline |
| Hung Sheng Construction |
| TECO Electric Machinery |
Hung Sheng and TECO Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and TECO Electric
The main advantage of trading using opposite Hung Sheng and TECO Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, TECO Electric 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 TECO Electric will offset losses from the drop in TECO Electric's long position.| Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total | Hung Sheng vs. Ennoconn Corp |
| TECO Electric vs. Walsin Lihwa Corp | TECO Electric vs. Far Eastern New | TECO Electric vs. Nan Ya Plastics | TECO Electric vs. Taiwan Cement Corp |
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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