Correlation Between CECO ENVIRONMENTAL and Roche Holding
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Roche Holding 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 Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Roche Holding Ltd, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Roche Holding 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 Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Roche Holding.
Diversification Opportunities for CECO ENVIRONMENTAL and Roche Holding
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CECO and Roche is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Roche Holding Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding 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 Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Roche Holding go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Roche Holding
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.55 times more return on investment than Roche Holding. However, CECO ENVIRONMENTAL is 1.55 times more volatile than Roche Holding Ltd. It trades about 0.11 of its potential returns per unit of risk. Roche Holding Ltd is currently generating about 0.02 per unit of risk. If you would invest 1,200 in CECO ENVIRONMENTAL on September 12, 2024 and sell it today you would earn a total of 1,980 from holding CECO ENVIRONMENTAL or generate 165.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Roche Holding Ltd
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Roche Holding |
CECO ENVIRONMENTAL and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Roche Holding
The main advantage of trading using opposite CECO ENVIRONMENTAL and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding's long position.| CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc |
| Roche Holding vs. Seven West Media | Roche Holding vs. PARKEN Sport Entertainment | Roche Holding vs. CECO ENVIRONMENTAL | Roche Holding vs. Daido Steel Co |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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