Correlation Between CECO ENVIRONMENTAL and MONGOLIA ENERG
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and MONGOLIA ENERG 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 MONGOLIA ENERG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and MONGOLIA ENERG HD 02, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and MONGOLIA ENERG 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 MONGOLIA ENERG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and MONGOLIA ENERG.
Diversification Opportunities for CECO ENVIRONMENTAL and MONGOLIA ENERG
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and MONGOLIA is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and MONGOLIA ENERG HD 02 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONGOLIA ENERG HD 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 MONGOLIA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONGOLIA ENERG HD has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and MONGOLIA ENERG go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and MONGOLIA ENERG
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 0.63 times more return on investment than MONGOLIA ENERG. However, CECO ENVIRONMENTAL is 1.6 times less risky than MONGOLIA ENERG. It trades about 0.14 of its potential returns per unit of risk. MONGOLIA ENERG HD 02 is currently generating about 0.06 per unit of risk. If you would invest 2,448 in CECO ENVIRONMENTAL on September 12, 2024 and sell it today you would earn a total of 830.00 from holding CECO ENVIRONMENTAL or generate 33.91% 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. MONGOLIA ENERG HD 02
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| MONGOLIA ENERG HD |
CECO ENVIRONMENTAL and MONGOLIA ENERG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and MONGOLIA ENERG
The main advantage of trading using opposite CECO ENVIRONMENTAL and MONGOLIA ENERG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, MONGOLIA ENERG 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 MONGOLIA ENERG will offset losses from the drop in MONGOLIA ENERG's long position.| CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc |
| MONGOLIA ENERG vs. Virtus Investment Partners | MONGOLIA ENERG vs. UNIVERSAL MUSIC GROUP | MONGOLIA ENERG vs. CDL INVESTMENT | MONGOLIA ENERG vs. Gladstone Investment |
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.
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