Correlation Between PACIFIC ONLINE and CECO ENVIRONMENTAL

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

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

Diversification Opportunities for PACIFIC ONLINE and CECO ENVIRONMENTAL

0.0

Correlation Coefficient

PACIFIC ONLINE  CECO ENVIRONMENTAL

Pay attention - limited upside

The 3 months correlation between PACIFIC and CECO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC ONLINE and CECO ENVIRONMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO ENVIRONMENTAL and PACIFIC ONLINE 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 PACIFIC ONLINE 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 has no effect on the direction of PACIFIC ONLINE i.e., PACIFIC ONLINE and CECO ENVIRONMENTAL go up and down completely randomly.

Pair Corralation between PACIFIC ONLINE and CECO ENVIRONMENTAL

If you would invest  3,064  in CECO ENVIRONMENTAL on October 8, 2024 and sell it today you would lose (4.00) from holding CECO ENVIRONMENTAL or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

PACIFIC ONLINE  vs.  CECO ENVIRONMENTAL

PACIFIC ONLINE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC ONLINE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PACIFIC ONLINE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CECO ENVIRONMENTAL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CECO ENVIRONMENTAL are ranked lower than 8 (%) 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.

Pair Trading with PACIFIC ONLINE and CECO ENVIRONMENTAL

The main advantage of trading using opposite PACIFIC ONLINE and CECO ENVIRONMENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACIFIC ONLINE 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 PACIFIC ONLINE and CECO ENVIRONMENTAL 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 Transaction History module to view history of all your transactions and understand their impact on performance.