Correlation Between Tecogen and Preformed Line

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

By analyzing existing cross correlation between Tecogen and Preformed Line Products, you can compare the effects of market volatilities on Tecogen and Preformed Line 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 Tecogen with a short position of Preformed Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tecogen and Preformed Line.

Diversification Opportunities for Tecogen and Preformed Line

0.61

Correlation Coefficient

Tecogen  Preformed Line

Poor diversification

The 3 months correlation between Tecogen and Preformed is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tecogen and Preformed Line Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preformed Line Products and Tecogen 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 Tecogen are associated (or correlated) with Preformed Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preformed Line Products has no effect on the direction of Tecogen i.e., Tecogen and Preformed Line go up and down completely randomly.

Pair Corralation between Tecogen and Preformed Line

Given the investment horizon of 90 days Tecogen is expected to generate 3.7 times more return on investment than Preformed Line. However, Tecogen is 3.7 times more volatile than Preformed Line Products. It trades about 0.14 of its potential returns per unit of risk. Preformed Line Products is currently generating about 0.18 per unit of risk. If you would invest  499.00  in Tecogen on May 28, 2025 and sell it today you would earn a total of  364.00  from holding Tecogen or generate 72.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tecogen  vs.  Preformed Line Products

Tecogen

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tecogen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Tecogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Preformed Line Products

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Preformed Line Products are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Preformed Line exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tecogen and Preformed Line

The main advantage of trading using opposite Tecogen and Preformed Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tecogen position performs unexpectedly, Preformed Line 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 Preformed Line will offset losses from the drop in Preformed Line's long position.

The idea behind Tecogen and Preformed Line Products 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.