Correlation Between CECO Environmental and Securitas

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

Diversification Opportunities for CECO Environmental and Securitas

0.66

Correlation Coefficient

CECO Environmental  Securitas

Poor diversification

The 3 months correlation between CECO and Securitas is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB 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 Securitas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Securitas AB has no effect on the direction of CECO Environmental i.e., CECO Environmental and Securitas go up and down completely randomly.

Pair Corralation between CECO Environmental and Securitas

If you would invest  2,838  in CECO Environmental Corp on October 17, 2024 and sell it today you would earn a total of  289.00  from holding CECO Environmental Corp or generate 10.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.63%
Values	Daily Returns

CECO Environmental Corp  vs.  Securitas AB

CECO Environmental Corp

Risk-Adjusted Performance

6 of 100

Modest

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

Securitas AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Securitas AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Securitas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CECO Environmental and Securitas

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

The idea behind CECO Environmental Corp and Securitas AB 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.