Correlation Between CECO Environmental and Telix Pharmaceuticals

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

Diversification Opportunities for CECO Environmental and Telix Pharmaceuticals

-0.06

Correlation Coefficient

CECO Environmental  Telix Pharmaceuticals

Good diversification

The 3 months correlation between CECO and Telix is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Telix Pharmaceuticals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix Pharmaceuticals 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 Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of CECO Environmental i.e., CECO Environmental and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between CECO Environmental and Telix Pharmaceuticals

Given the investment horizon of 90 days CECO Environmental is expected to generate 1.1 times less return on investment than Telix Pharmaceuticals. In addition to that, CECO Environmental is 1.27 times more volatile than Telix Pharmaceuticals Limited. It trades about 0.07 of its total potential returns per unit of risk. Telix Pharmaceuticals Limited is currently generating about 0.1 per unit of volatility. If you would invest  1,515  in Telix Pharmaceuticals Limited on October 23, 2024 and sell it today you would earn a total of  163.00  from holding Telix Pharmaceuticals Limited or generate 10.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

CECO Environmental Corp  vs.  Telix Pharmaceuticals Limited

CECO Environmental Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 5 (%) 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.

Telix Pharmaceuticals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Telix Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CECO Environmental and Telix Pharmaceuticals

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

The idea behind CECO Environmental Corp and Telix Pharmaceuticals Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.