Correlation Between Supercom and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Supercom 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 Supercom and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supercom and CECO Environmental Corp, you can compare the effects of market volatilities on Supercom 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 Supercom with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supercom and CECO Environmental.
Diversification Opportunities for Supercom and CECO Environmental
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Supercom and CECO is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Supercom 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 Supercom 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 Supercom 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 Supercom i.e., Supercom and CECO Environmental go up and down completely randomly.
Pair Corralation between Supercom and CECO Environmental
Given the investment horizon of 90 days Supercom is expected to generate 10.54 times less return on investment than CECO Environmental. In addition to that, Supercom is 1.22 times more volatile than CECO Environmental Corp. It trades about 0.03 of its total potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.45 per unit of volatility. If you would invest 2,256 in CECO Environmental Corp on August 30, 2024 and sell it today you would earn a total of 932.00 from holding CECO Environmental Corp or generate 41.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supercom vs. CECO Environmental Corp
Performance |
| Timeline |
| Supercom |
| CECO Environmental Corp |
Supercom and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supercom and CECO Environmental
The main advantage of trading using opposite Supercom and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supercom 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.| Supercom vs. Fabrinet | Supercom vs. Knowles Cor | Supercom vs. Ubiquiti Networks | Supercom vs. AmpliTech Group |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. CO2 Solutions |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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