Correlation Between TECO 2030 and SMC Corp

Can any of the company-specific risk be diversified away by investing in both TECO 2030 and SMC Corp 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 SMC Corp 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 SMC Corp Japan, you can compare the effects of market volatilities on TECO 2030 and SMC Corp 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 SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TECO 2030 and SMC Corp.

Diversification Opportunities for TECO 2030 and SMC Corp

0.45

Correlation Coefficient

TECO 2030  SMC Corp

Very weak diversification

The 3 months correlation between TECO and SMC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding TECO 2030 ASA and SMC Corp Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp Japan 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 SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp Japan has no effect on the direction of TECO 2030 i.e., TECO 2030 and SMC Corp go up and down completely randomly.

Pair Corralation between TECO 2030 and SMC Corp

Assuming the 90 days horizon TECO 2030 ASA is expected to under-perform the SMC Corp. In addition to that, TECO 2030 is 18.02 times more volatile than SMC Corp Japan. It trades about -0.16 of its total potential returns per unit of risk. SMC Corp Japan is currently generating about -0.28 per unit of volatility. If you would invest  2,158  in SMC Corp Japan on October 5, 2024 and sell it today you would lose (202.00) from holding SMC Corp Japan or give up 9.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

TECO 2030 ASA  vs.  SMC Corp Japan

TECO 2030 ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TECO 2030 ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SMC Corp Japan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMC Corp Japan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TECO 2030 and SMC Corp

The main advantage of trading using opposite TECO 2030 and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TECO 2030 position performs unexpectedly, SMC Corp 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 SMC Corp will offset losses from the drop in SMC Corp's long position.

The idea behind TECO 2030 ASA and SMC Corp Japan 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.