Correlation Between CECO ENVIRONMENTAL and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and CosmoSteel Holdings 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 CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and CosmoSteel Holdings 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 CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and CosmoSteel Holdings.
Diversification Opportunities for CECO ENVIRONMENTAL and CosmoSteel Holdings
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between CECO and CosmoSteel is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings 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 CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and CosmoSteel Holdings
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 2.85 times more return on investment than CosmoSteel Holdings. However, CECO ENVIRONMENTAL is 2.85 times more volatile than CosmoSteel Holdings Limited. It trades about 0.2 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.03 per unit of risk. If you would invest 2,426 in CECO ENVIRONMENTAL on August 27, 2024 and sell it today you would earn a total of 558.00 from holding CECO ENVIRONMENTAL or generate 23.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| CosmoSteel Holdings |
CECO ENVIRONMENTAL and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and CosmoSteel Holdings
The main advantage of trading using opposite CECO ENVIRONMENTAL and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, CosmoSteel Holdings 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 CosmoSteel Holdings will offset losses from the drop in CosmoSteel Holdings' long position.| CECO ENVIRONMENTAL vs. Sqs Software Quality | CECO ENVIRONMENTAL vs. National Beverage Corp | CECO ENVIRONMENTAL vs. Constellation Software | CECO ENVIRONMENTAL vs. AOI Electronics Co |
| CosmoSteel Holdings vs. Superior Plus Corp | CosmoSteel Holdings vs. NMI Holdings | CosmoSteel Holdings vs. Origin Agritech | CosmoSteel Holdings vs. SIVERS SEMICONDUCTORS AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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