Correlation Between CECO Environmental and SunLink Health
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and SunLink Health 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 SunLink Health 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 SunLink Health Systems, you can compare the effects of market volatilities on CECO Environmental and SunLink Health 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 SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and SunLink Health.
Diversification Opportunities for CECO Environmental and SunLink Health
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and SunLink is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems 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 SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of CECO Environmental i.e., CECO Environmental and SunLink Health go up and down completely randomly.
Pair Corralation between CECO Environmental and SunLink Health
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.71 times more return on investment than SunLink Health. However, CECO Environmental Corp is 1.41 times less risky than SunLink Health. It trades about 0.08 of its potential returns per unit of risk. SunLink Health Systems is currently generating about 0.0 per unit of risk. If you would invest 1,964 in CECO Environmental Corp on August 27, 2024 and sell it today you would earn a total of 1,172 from holding CECO Environmental Corp or generate 59.67% 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. SunLink Health Systems
Performance |
| Timeline |
| CECO Environmental Corp |
| SunLink Health Systems |
CECO Environmental and SunLink Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and SunLink Health
The main advantage of trading using opposite CECO Environmental and SunLink Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, SunLink Health 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 SunLink Health will offset losses from the drop in SunLink Health's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. 374Water Common Stock |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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