Correlation Between CECO ENVIRONMENTAL and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Tianjin Capital 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 Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Tianjin Capital Environmental, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Tianjin Capital 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 Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Tianjin Capital.
Diversification Opportunities for CECO ENVIRONMENTAL and Tianjin Capital
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and Tianjin is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Tianjin Capital go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Tianjin Capital
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 2.75 times more return on investment than Tianjin Capital. However, CECO ENVIRONMENTAL is 2.75 times more volatile than Tianjin Capital Environmental. It trades about 0.14 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.07 per unit of risk. If you would invest 2,450 in CECO ENVIRONMENTAL on August 24, 2024 and sell it today you would earn a total of 398.00 from holding CECO ENVIRONMENTAL or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Tianjin Capital Environmental
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Tianjin Capital Envi |
CECO ENVIRONMENTAL and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Tianjin Capital
The main advantage of trading using opposite CECO ENVIRONMENTAL and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.| CECO ENVIRONMENTAL vs. SIDETRADE EO 1 | CECO ENVIRONMENTAL vs. Auto Trader Group | CECO ENVIRONMENTAL vs. AUTO TRADER ADR | CECO ENVIRONMENTAL vs. MEDICAL FACILITIES NEW |
| Tianjin Capital vs. GFL ENVIRONM | Tianjin Capital vs. Superior Plus Corp | Tianjin Capital vs. NMI Holdings | Tianjin Capital vs. Origin Agritech |
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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