Correlation Between CECO ENVIRONMENTAL and Elis SA
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Elis SA 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 Elis SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Elis SA, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Elis SA 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 Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Elis SA.
Diversification Opportunities for CECO ENVIRONMENTAL and Elis SA
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CECO and Elis is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA 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 are associated (or correlated) with Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Elis SA go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Elis SA
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.51 times more return on investment than Elis SA. However, CECO ENVIRONMENTAL is 1.51 times more volatile than Elis SA. It trades about 0.09 of its potential returns per unit of risk. Elis SA is currently generating about -0.05 per unit of risk. If you would invest 2,220 in CECO ENVIRONMENTAL on September 2, 2024 and sell it today you would earn a total of 778.00 from holding CECO ENVIRONMENTAL or generate 35.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Elis SA
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Elis SA |
CECO ENVIRONMENTAL and Elis SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Elis SA
The main advantage of trading using opposite CECO ENVIRONMENTAL and Elis SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Elis SA 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 Elis SA will offset losses from the drop in Elis SA's long position.| CECO ENVIRONMENTAL vs. Automatic Data Processing | CECO ENVIRONMENTAL vs. TIANDE CHEMICAL | CECO ENVIRONMENTAL vs. Soken Chemical Engineering | CECO ENVIRONMENTAL vs. Nucletron Electronic Aktiengesellschaft |
| Elis SA vs. Games Workshop Group | Elis SA vs. FRACTAL GAMING GROUP | Elis SA vs. Media and Games | Elis SA vs. GEELY AUTOMOBILE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |