Correlation Between CECO Environmental and Todos Medical

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

Diversification Opportunities for CECO Environmental and Todos Medical

0.0

Correlation Coefficient

CECO Environmental  Todos Medical

Pay attention - limited upside

The 3 months correlation between CECO and Todos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Todos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Todos Medical 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 Todos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Todos Medical has no effect on the direction of CECO Environmental i.e., CECO Environmental and Todos Medical go up and down completely randomly.

Pair Corralation between CECO Environmental and Todos Medical

Given the investment horizon of 90 days CECO Environmental is expected to generate 12.38 times less return on investment than Todos Medical. But when comparing it to its historical volatility, CECO Environmental Corp is 19.76 times less risky than Todos Medical. It trades about 0.08 of its potential returns per unit of risk. Todos Medical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Todos Medical on September 26, 2024 and sell it today you would lose (0.05) from holding Todos Medical or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CECO Environmental Corp  vs.  Todos Medical

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.

Todos Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CECO Environmental and Todos Medical

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

The idea behind CECO Environmental Corp and Todos Medical 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.