Correlation Between CECO Environmental and Konami Holdings
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Konami Holdings 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 Konami Holdings 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 Konami Holdings, you can compare the effects of market volatilities on CECO Environmental and Konami Holdings 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 Konami Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Konami Holdings.
Diversification Opportunities for CECO Environmental and Konami Holdings
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CECO and Konami is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Konami Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konami Holdings 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 Konami Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konami Holdings has no effect on the direction of CECO Environmental i.e., CECO Environmental and Konami Holdings go up and down completely randomly.
Pair Corralation between CECO Environmental and Konami Holdings
Given the investment horizon of 90 days CECO Environmental is expected to generate 8.27 times less return on investment than Konami Holdings. But when comparing it to its historical volatility, CECO Environmental Corp is 1.86 times less risky than Konami Holdings. It trades about 0.08 of its potential returns per unit of risk. Konami Holdings is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 4,460 in Konami Holdings on September 2, 2024 and sell it today you would earn a total of 1,028 from holding Konami Holdings or generate 23.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 2.22% |
| Values | Daily Returns |
CECO Environmental Corp vs. Konami Holdings
Performance |
| Timeline |
| CECO Environmental Corp |
| Konami Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CECO Environmental and Konami Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Konami Holdings
The main advantage of trading using opposite CECO Environmental and Konami Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Konami Holdings 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 Konami Holdings will offset losses from the drop in Konami Holdings' long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Konami Holdings vs. Agnico Eagle Mines | Konami Holdings vs. Jacobs Solutions | Konami Holdings vs. CECO Environmental Corp | Konami Holdings vs. ChampionX |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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