Correlation Between GEORGIA and CECO Environmental

Can any of the company-specific risk be diversified away by investing in both GEORGIA and CECO Environmental 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 GEORGIA and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEORGIA PWR 325 and CECO Environmental Corp, you can compare the effects of market volatilities on GEORGIA and CECO Environmental 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 GEORGIA with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEORGIA and CECO Environmental.

Diversification Opportunities for GEORGIA and CECO Environmental

-0.46

Correlation Coefficient

GEORGIA  CECO Environmental

Very good diversification

The 3 months correlation between GEORGIA and CECO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding GEORGIA PWR 325 and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and GEORGIA 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 GEORGIA PWR 325 are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of GEORGIA i.e., GEORGIA and CECO Environmental go up and down completely randomly.

Pair Corralation between GEORGIA and CECO Environmental

Assuming the 90 days trading horizon GEORGIA PWR 325 is expected to under-perform the CECO Environmental. But the bond apears to be less risky and, when comparing its historical volatility, GEORGIA PWR 325 is 6.43 times less risky than CECO Environmental. The bond trades about -0.15 of its potential returns per unit of risk. The CECO Environmental Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,856  in CECO Environmental Corp on September 15, 2024 and sell it today you would earn a total of  355.00  from holding CECO Environmental Corp or generate 12.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

GEORGIA PWR 325  vs.  CECO Environmental Corp

GEORGIA PWR 325

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEORGIA PWR 325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GEORGIA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CECO Environmental Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, CECO Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEORGIA and CECO Environmental

The main advantage of trading using opposite GEORGIA and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEORGIA position performs unexpectedly, CECO Environmental 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 CECO Environmental will offset losses from the drop in CECO Environmental's long position.

The idea behind GEORGIA PWR 325 and CECO Environmental Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.