Correlation Between CECO Environmental and China Natural
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and China Natural 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 Natural 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 Natural Resources, you can compare the effects of market volatilities on CECO Environmental and China Natural 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 Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and China Natural.
Diversification Opportunities for CECO Environmental and China Natural
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and China is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and China Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Natural Resources 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 Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Natural Resources has no effect on the direction of CECO Environmental i.e., CECO Environmental and China Natural go up and down completely randomly.
Pair Corralation between CECO Environmental and China Natural
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.34 times more return on investment than China Natural. However, CECO Environmental is 1.34 times more volatile than China Natural Resources. It trades about 0.16 of its potential returns per unit of risk. China Natural Resources is currently generating about -0.2 per unit of risk. If you would invest 2,654 in CECO Environmental Corp on August 24, 2024 and sell it today you would earn a total of 412.50 from holding CECO Environmental Corp or generate 15.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. China Natural Resources
Performance |
| Timeline |
| CECO Environmental Corp |
| China Natural Resources |
CECO Environmental and China Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and China Natural
The main advantage of trading using opposite CECO Environmental and China Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, China Natural 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 Natural will offset losses from the drop in China Natural's long position.| CECO Environmental vs. China Natural Resources | CECO Environmental vs. Seychelle Environmtl | CECO Environmental vs. Vow ASA | CECO Environmental vs. Eestech |
| China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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