Correlation Between TECO 2030 and Shanghai Electric
Can any of the company-specific risk be diversified away by investing in both TECO 2030 and Shanghai 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 TECO 2030 and Shanghai Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TECO 2030 ASA and Shanghai Electric Group, you can compare the effects of market volatilities on TECO 2030 and Shanghai 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 TECO 2030 with a short position of Shanghai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO 2030 and Shanghai Electric.
Diversification Opportunities for TECO 2030 and Shanghai Electric
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TECO and Shanghai is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding TECO 2030 ASA and Shanghai Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Electric and TECO 2030 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 2030 ASA are associated (or correlated) with Shanghai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Electric has no effect on the direction of TECO 2030 i.e., TECO 2030 and Shanghai Electric go up and down completely randomly.
Pair Corralation between TECO 2030 and Shanghai Electric
Assuming the 90 days horizon TECO 2030 ASA is expected to under-perform the Shanghai Electric. In addition to that, TECO 2030 is 1.18 times more volatile than Shanghai Electric Group. It trades about -0.25 of its total potential returns per unit of risk. Shanghai Electric Group is currently generating about 0.08 per unit of volatility. If you would invest 654.00 in Shanghai Electric Group on September 1, 2024 and sell it today you would earn a total of 56.00 from holding Shanghai Electric Group or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TECO 2030 ASA vs. Shanghai Electric Group
Performance |
| Timeline |
| TECO 2030 ASA |
| Shanghai Electric |
TECO 2030 and Shanghai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TECO 2030 and Shanghai Electric
The main advantage of trading using opposite TECO 2030 and Shanghai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO 2030 position performs unexpectedly, Shanghai 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 Shanghai Electric will offset losses from the drop in Shanghai Electric's long position.| TECO 2030 vs. GE Aerospace | TECO 2030 vs. Eaton PLC | TECO 2030 vs. Siemens AG Class | TECO 2030 vs. Parker Hannifin |
| Shanghai Electric vs. Xinjiang Goldwind Science | Shanghai Electric vs. American Superconductor | Shanghai Electric vs. Cummins |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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