Correlation Between TECO Electric and Quintain Steel

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

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

Diversification Opportunities for TECO Electric and Quintain Steel

-0.74

Correlation Coefficient

TECO Electric  Quintain Steel

Pay attention - limited upside

The 3 months correlation between TECO and Quintain is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding TECO Electric Machinery and Quintain Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quintain Steel and TECO Electric 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 Electric Machinery are associated (or correlated) with Quintain Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quintain Steel has no effect on the direction of TECO Electric i.e., TECO Electric and Quintain Steel go up and down completely randomly.

Pair Corralation between TECO Electric and Quintain Steel

Assuming the 90 days trading horizon TECO Electric Machinery is expected to generate 1.19 times more return on investment than Quintain Steel. However, TECO Electric is 1.19 times more volatile than Quintain Steel Co. It trades about 0.07 of its potential returns per unit of risk. Quintain Steel Co is currently generating about -0.02 per unit of risk. If you would invest  2,725  in TECO Electric Machinery on October 9, 2024 and sell it today you would earn a total of  2,615  from holding TECO Electric Machinery or generate 95.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

TECO Electric Machinery  vs.  Quintain Steel Co

TECO Electric Machinery

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TECO Electric Machinery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, TECO Electric may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Quintain Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quintain Steel Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with TECO Electric and Quintain Steel

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

The idea behind TECO Electric Machinery and Quintain Steel Co 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.