Correlation Between CECO Environmental and Sellas Life
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Sellas Life 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 Sellas Life 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 Sellas Life Sciences, you can compare the effects of market volatilities on CECO Environmental and Sellas Life 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 Sellas Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Sellas Life.
Diversification Opportunities for CECO Environmental and Sellas Life
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CECO and Sellas is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Sellas Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sellas Life Sciences 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 Sellas Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sellas Life Sciences has no effect on the direction of CECO Environmental i.e., CECO Environmental and Sellas Life go up and down completely randomly.
Pair Corralation between CECO Environmental and Sellas Life
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.79 times more return on investment than Sellas Life. However, CECO Environmental Corp is 1.27 times less risky than Sellas Life. It trades about 0.09 of its potential returns per unit of risk. Sellas Life Sciences is currently generating about -0.03 per unit of risk. If you would invest 2,440 in CECO Environmental Corp on September 3, 2024 and sell it today you would earn a total of 763.00 from holding CECO Environmental Corp or generate 31.27% 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. Sellas Life Sciences
Performance |
| Timeline |
| CECO Environmental Corp |
| Sellas Life Sciences |
CECO Environmental and Sellas Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Sellas Life
The main advantage of trading using opposite CECO Environmental and Sellas Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Sellas Life 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 Sellas Life will offset losses from the drop in Sellas Life's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Sellas Life vs. NLS Pharmaceutics AG | Sellas Life vs. Mereo BioPharma Group | Sellas Life vs. Day One Biopharmaceuticals | Sellas Life vs. Reviva Pharmaceuticals Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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