Correlation Between CECO ENVIRONMENTAL and COSMOSTEEL HLDGS

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

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

Diversification Opportunities for CECO ENVIRONMENTAL and COSMOSTEEL HLDGS

-0.04

Correlation Coefficient

CECO ENVIRONMENTAL  COSMOSTEEL HLDGS

Good diversification

The 3 months correlation between CECO and COSMOSTEEL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and COSMOSTEEL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMOSTEEL HLDGS 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 COSMOSTEEL HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMOSTEEL HLDGS has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and COSMOSTEEL HLDGS go up and down completely randomly.

Pair Corralation between CECO ENVIRONMENTAL and COSMOSTEEL HLDGS

Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.74 times more return on investment than COSMOSTEEL HLDGS. However, CECO ENVIRONMENTAL is 1.74 times more volatile than COSMOSTEEL HLDGS. It trades about 0.12 of its potential returns per unit of risk. COSMOSTEEL HLDGS is currently generating about 0.03 per unit of risk. If you would invest  2,388  in CECO ENVIRONMENTAL on September 4, 2024 and sell it today you would earn a total of  704.00  from holding CECO ENVIRONMENTAL or generate 29.48% return on investment over 90 days.

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

CECO ENVIRONMENTAL  vs.  COSMOSTEEL HLDGS

CECO ENVIRONMENTAL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CECO ENVIRONMENTAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CECO ENVIRONMENTAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

COSMOSTEEL HLDGS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSMOSTEEL HLDGS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, COSMOSTEEL HLDGS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CECO ENVIRONMENTAL and COSMOSTEEL HLDGS

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

The idea behind CECO ENVIRONMENTAL and COSMOSTEEL HLDGS 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.