Correlation Between Yulon Finance and TECO Electric
Can any of the company-specific risk be diversified away by investing in both Yulon Finance 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 Yulon Finance and TECO Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Finance Corp and TECO Electric Machinery, you can compare the effects of market volatilities on Yulon Finance 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 Yulon Finance with a short position of TECO Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and TECO Electric.
Diversification Opportunities for Yulon Finance and TECO Electric
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yulon and TECO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp 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 Yulon Finance 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 Yulon Finance Corp 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 Yulon Finance i.e., Yulon Finance and TECO Electric go up and down completely randomly.
Pair Corralation between Yulon Finance and TECO Electric
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the TECO Electric. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Finance Corp is 1.32 times less risky than TECO Electric. The stock trades about -0.03 of its potential returns per unit of risk. The TECO Electric Machinery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,800 in TECO Electric Machinery on August 26, 2024 and sell it today you would earn a total of 2,410 from holding TECO Electric Machinery or generate 86.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. TECO Electric Machinery
Performance |
| Timeline |
| Yulon Finance Corp |
| TECO Electric Machinery |
Yulon Finance and TECO Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and TECO Electric
The main advantage of trading using opposite Yulon Finance and TECO Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance 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.| Yulon Finance vs. Chailease Holding Co | Yulon Finance vs. Taiwan Secom Co | Yulon Finance vs. TTET Union Corp | Yulon Finance vs. China Steel Chemical |
| TECO Electric vs. Sunny Friend Environmental | TECO Electric vs. TTET Union Corp | TECO Electric vs. ECOVE Environment Corp | TECO Electric vs. Yulon Finance 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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