Correlation Between CECO ENVIRONMENTAL and EHEALTH
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and EHEALTH 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 EHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and EHEALTH, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and EHEALTH.
Diversification Opportunities for CECO ENVIRONMENTAL and EHEALTH
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CECO and EHEALTH is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and EHEALTH go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and EHEALTH
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 0.62 times more return on investment than EHEALTH. However, CECO ENVIRONMENTAL is 1.61 times less risky than EHEALTH. It trades about 0.08 of its potential returns per unit of risk. EHEALTH is currently generating about 0.03 per unit of risk. If you would invest 1,120 in CECO ENVIRONMENTAL on September 2, 2024 and sell it today you would earn a total of 1,878 from holding CECO ENVIRONMENTAL or generate 167.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. EHEALTH
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| EHEALTH |
CECO ENVIRONMENTAL and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and EHEALTH
The main advantage of trading using opposite CECO ENVIRONMENTAL and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH'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 |
| EHEALTH vs. SIVERS SEMICONDUCTORS AB | EHEALTH vs. Darden Restaurants | EHEALTH vs. Reliance Steel Aluminum | EHEALTH vs. Q2M Managementberatung AG |
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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