Correlation Between CECO ENVIRONMENTAL and ASTRA INTERNATIONAL

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

By analyzing existing cross correlation between CECO ENVIRONMENTAL and ASTRA INTERNATIONAL, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and ASTRA INTERNATIONAL.

Diversification Opportunities for CECO ENVIRONMENTAL and ASTRA INTERNATIONAL

0.02

Correlation Coefficient

CECO ENVIRONMENTAL  ASTRA INTERNATIONAL

Significant diversification

The 3 months correlation between CECO and ASTRA is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and ASTRA INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA INTERNATIONAL has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and ASTRA INTERNATIONAL go up and down completely randomly.

Pair Corralation between CECO ENVIRONMENTAL and ASTRA INTERNATIONAL

Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.14 times less return on investment than ASTRA INTERNATIONAL. But when comparing it to its historical volatility, CECO ENVIRONMENTAL is 1.77 times less risky than ASTRA INTERNATIONAL. It trades about 0.08 of its potential returns per unit of risk. ASTRA INTERNATIONAL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25.00  in ASTRA INTERNATIONAL on September 1, 2024 and sell it today you would earn a total of  5.00  from holding ASTRA INTERNATIONAL or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CECO ENVIRONMENTAL  vs.  ASTRA INTERNATIONAL

CECO ENVIRONMENTAL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CECO ENVIRONMENTAL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CECO ENVIRONMENTAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

ASTRA INTERNATIONAL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASTRA INTERNATIONAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ASTRA INTERNATIONAL may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with CECO ENVIRONMENTAL and ASTRA INTERNATIONAL

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

The idea behind CECO ENVIRONMENTAL and ASTRA INTERNATIONAL 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.