Correlation Between CECO Environmental and Braskem SA
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Braskem SA 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 Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO Environmental Corp and Braskem SA Class, you can compare the effects of market volatilities on CECO Environmental and Braskem SA 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 Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Braskem SA.
Diversification Opportunities for CECO Environmental and Braskem SA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CECO and Braskem is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Braskem SA Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA Class 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 Corp are associated (or correlated) with Braskem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braskem SA Class has no effect on the direction of CECO Environmental i.e., CECO Environmental and Braskem SA go up and down completely randomly.
Pair Corralation between CECO Environmental and Braskem SA
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.9 times more return on investment than Braskem SA. However, CECO Environmental Corp is 1.11 times less risky than Braskem SA. It trades about 0.04 of its potential returns per unit of risk. Braskem SA Class is currently generating about -0.06 per unit of risk. If you would invest 1,895 in CECO Environmental Corp on December 3, 2024 and sell it today you would earn a total of 537.00 from holding CECO Environmental Corp or generate 28.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CECO Environmental Corp vs. Braskem SA Class
Performance |
Timeline |
CECO Environmental Corp |
Braskem SA Class |
CECO Environmental and Braskem SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CECO Environmental and Braskem SA
The main advantage of trading using opposite CECO Environmental and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Braskem SA 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 Braskem SA will offset losses from the drop in Braskem SA's long position.CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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