Correlation Between CECO Environmental and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Amkor Technology 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 CECO Environmental and Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO Environmental Corp and Amkor Technology, you can compare the effects of market volatilities on CECO Environmental and Amkor Technology 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 CECO Environmental with a short position of Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Amkor Technology.
Diversification Opportunities for CECO Environmental and Amkor Technology
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CECO and Amkor is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and CECO Environmental 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 CECO Environmental Corp are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of CECO Environmental i.e., CECO Environmental and Amkor Technology go up and down completely randomly.
Pair Corralation between CECO Environmental and Amkor Technology
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.1 times more return on investment than Amkor Technology. However, CECO Environmental is 1.1 times more volatile than Amkor Technology. It trades about 0.08 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.01 per unit of risk. If you would invest 1,235 in CECO Environmental Corp on September 3, 2024 and sell it today you would earn a total of 1,970 from holding CECO Environmental Corp or generate 159.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Amkor Technology
Performance |
| Timeline |
| CECO Environmental Corp |
| Amkor Technology |
CECO Environmental and Amkor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Amkor Technology
The main advantage of trading using opposite CECO Environmental and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Amkor Technology 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 Amkor Technology will offset losses from the drop in Amkor Technology's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Amkor Technology vs. Power Integrations | Amkor Technology vs. Diodes Incorporated | Amkor Technology vs. MACOM Technology Solutions | Amkor Technology vs. Cirrus Logic |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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