Correlation Between China Natural and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both China Natural and CECO Environmental 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 China Natural and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Natural Resources and CECO Environmental Corp, you can compare the effects of market volatilities on China Natural and CECO Environmental 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 China Natural with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Natural and CECO Environmental.
Diversification Opportunities for China Natural and CECO Environmental
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and CECO is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding China Natural Resources and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and China Natural 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 China Natural Resources are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of China Natural i.e., China Natural and CECO Environmental go up and down completely randomly.
Pair Corralation between China Natural and CECO Environmental
Given the investment horizon of 90 days China Natural Resources is expected to under-perform the CECO Environmental. But the stock apears to be less risky and, when comparing its historical volatility, China Natural Resources is 1.37 times less risky than CECO Environmental. The stock trades about -0.21 of its potential returns per unit of risk. The CECO Environmental Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,631 in CECO Environmental Corp on August 28, 2024 and sell it today you would earn a total of 668.00 from holding CECO Environmental Corp or generate 25.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Natural Resources vs. CECO Environmental Corp
Performance |
| Timeline |
| China Natural Resources |
| CECO Environmental Corp |
China Natural and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Natural and CECO Environmental
The main advantage of trading using opposite China Natural and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Natural position performs unexpectedly, CECO Environmental 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 CECO Environmental will offset losses from the drop in CECO Environmental's long position.| China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |