Correlation Between CECO ENVIRONMENTAL and PC Connection
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and PC Connection 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 PC Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and PC Connection, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and PC Connection 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 PC Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and PC Connection.
Diversification Opportunities for CECO ENVIRONMENTAL and PC Connection
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CECO and PCC is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and PC Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Connection 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 PC Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Connection has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and PC Connection go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and PC Connection
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.58 times more return on investment than PC Connection. However, CECO ENVIRONMENTAL is 1.58 times more volatile than PC Connection. It trades about 0.09 of its potential returns per unit of risk. PC Connection is currently generating about 0.05 per unit of risk. If you would invest 1,750 in CECO ENVIRONMENTAL on September 14, 2024 and sell it today you would earn a total of 1,378 from holding CECO ENVIRONMENTAL or generate 78.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. PC Connection
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| PC Connection |
CECO ENVIRONMENTAL and PC Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and PC Connection
The main advantage of trading using opposite CECO ENVIRONMENTAL and PC Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, PC Connection 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 PC Connection will offset losses from the drop in PC Connection's long position.| CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc |
| PC Connection vs. NH HOTEL GROUP | PC Connection vs. CECO ENVIRONMENTAL | PC Connection vs. INTERCONT HOTELS | PC Connection vs. MELIA HOTELS |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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