Correlation Between Guangdong Investment and CECO ENVIRONMENTAL
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment 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 Guangdong Investment and CECO ENVIRONMENTAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and CECO ENVIRONMENTAL, you can compare the effects of market volatilities on Guangdong Investment 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 Guangdong Investment with a short position of CECO ENVIRONMENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and CECO ENVIRONMENTAL.
Diversification Opportunities for Guangdong Investment and CECO ENVIRONMENTAL
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangdong and CECO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and CECO ENVIRONMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO ENVIRONMENTAL and Guangdong Investment 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 Guangdong Investment Limited 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 has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and CECO ENVIRONMENTAL go up and down completely randomly.
Pair Corralation between Guangdong Investment and CECO ENVIRONMENTAL
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.72 times more return on investment than CECO ENVIRONMENTAL. However, Guangdong Investment is 1.72 times more volatile than CECO ENVIRONMENTAL. It trades about 0.21 of its potential returns per unit of risk. CECO ENVIRONMENTAL is currently generating about 0.09 per unit of risk. If you would invest 29.00 in Guangdong Investment Limited on October 18, 2024 and sell it today you would earn a total of 44.00 from holding Guangdong Investment Limited or generate 151.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. CECO ENVIRONMENTAL
Performance |
| Timeline |
| Guangdong Investment |
| CECO ENVIRONMENTAL |
Guangdong Investment and CECO ENVIRONMENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and CECO ENVIRONMENTAL
The main advantage of trading using opposite Guangdong Investment and CECO ENVIRONMENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment 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.| Guangdong Investment vs. ADRIATIC METALS LS 013355 | Guangdong Investment vs. Calibre Mining Corp | Guangdong Investment vs. ATRESMEDIA | Guangdong Investment vs. SERI INDUSTRIAL EO |
| CECO ENVIRONMENTAL vs. MagnaChip Semiconductor Corp | CECO ENVIRONMENTAL vs. Tower Semiconductor | CECO ENVIRONMENTAL vs. Guangdong Investment Limited | CECO ENVIRONMENTAL vs. FIRST SAVINGS FINL |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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