Correlation Between CECO Environmental and Comstock Holding

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Comstock Holding 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 Comstock Holding 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 Comstock Holding Companies, you can compare the effects of market volatilities on CECO Environmental and Comstock Holding 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 Comstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Comstock Holding.

Diversification Opportunities for CECO Environmental and Comstock Holding

-0.67

Correlation Coefficient

CECO Environmental  Comstock Holding

Excellent diversification

The 3 months correlation between CECO and Comstock is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Comstock Holding Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Holding Com 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 Comstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Holding Com has no effect on the direction of CECO Environmental i.e., CECO Environmental and Comstock Holding go up and down completely randomly.

Pair Corralation between CECO Environmental and Comstock Holding

Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.78 times more return on investment than Comstock Holding. However, CECO Environmental Corp is 1.29 times less risky than Comstock Holding. It trades about 0.08 of its potential returns per unit of risk. Comstock Holding Companies is currently generating about 0.06 per unit of risk. If you would invest  1,588  in CECO Environmental Corp on September 26, 2024 and sell it today you would earn a total of  1,338  from holding CECO Environmental Corp or generate 84.26% return on investment over 90 days.

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

CECO Environmental Corp  vs.  Comstock Holding Companies

CECO Environmental Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, CECO Environmental is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Comstock Holding Com

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comstock Holding Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with CECO Environmental and Comstock Holding

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

The idea behind CECO Environmental Corp and Comstock Holding Companies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.