Correlation Between Waffer Technology and TECO Electric

Can any of the company-specific risk be diversified away by investing in both Waffer Technology 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 Waffer Technology and TECO Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Waffer Technology Corp and TECO Electric Machinery, you can compare the effects of market volatilities on Waffer Technology 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 Waffer Technology with a short position of TECO Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waffer Technology and TECO Electric.

Diversification Opportunities for Waffer Technology and TECO Electric

-0.5

Correlation Coefficient

Waffer Technology  TECO Electric

Very good diversification

The 3 months correlation between Waffer and TECO is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Waffer Technology 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 Waffer Technology 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 Waffer Technology 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 Waffer Technology i.e., Waffer Technology and TECO Electric go up and down completely randomly.

Pair Corralation between Waffer Technology and TECO Electric

Assuming the 90 days trading horizon Waffer Technology Corp is expected to under-perform the TECO Electric. In addition to that, Waffer Technology is 1.29 times more volatile than TECO Electric Machinery. It trades about -0.06 of its total potential returns per unit of risk. TECO Electric Machinery is currently generating about 0.08 per unit of volatility. If you would invest  4,760  in TECO Electric Machinery on February 1, 2024 and sell it today you would earn a total of  800.00  from holding TECO Electric Machinery or generate 16.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.15%
Values	Daily Returns

Waffer Technology Corp  vs.  TECO Electric Machinery

Waffer Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waffer Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Waffer Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TECO Electric Machinery

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TECO Electric Machinery are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TECO Electric showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waffer Technology and TECO Electric

The main advantage of trading using opposite Waffer Technology and TECO Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waffer Technology 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.

The idea behind Waffer Technology Corp and TECO Electric Machinery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.