Correlation Between CECO Environmental and China Tontine
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and China Tontine 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 China Tontine 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 China Tontine Wines, you can compare the effects of market volatilities on CECO Environmental and China Tontine 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 China Tontine. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and China Tontine.
Diversification Opportunities for CECO Environmental and China Tontine
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CECO and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and China Tontine Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Tontine Wines 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 China Tontine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Tontine Wines has no effect on the direction of CECO Environmental i.e., CECO Environmental and China Tontine go up and down completely randomly.
Pair Corralation between CECO Environmental and China Tontine
Given the investment horizon of 90 days CECO Environmental is expected to generate 25.47 times less return on investment than China Tontine. But when comparing it to its historical volatility, CECO Environmental Corp is 28.43 times less risky than China Tontine. It trades about 0.1 of its potential returns per unit of risk. China Tontine Wines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.40 in China Tontine Wines on September 12, 2024 and sell it today you would earn a total of 6.70 from holding China Tontine Wines or generate 1675.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.15% |
| Values | Daily Returns |
CECO Environmental Corp vs. China Tontine Wines
Performance |
| Timeline |
| CECO Environmental Corp |
| China Tontine Wines |
CECO Environmental and China Tontine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and China Tontine
The main advantage of trading using opposite CECO Environmental and China Tontine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, China Tontine 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 China Tontine will offset losses from the drop in China Tontine's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| China Tontine vs. Andrew Peller Limited | China Tontine vs. Aristocrat Group Corp | China Tontine vs. Iconic Brands | China Tontine vs. Naked Wines plc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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