Correlation Between CECO Environmental and TOPTB

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and TOPTB 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 TOPTB 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 TOPTB 5375 20 NOV 48, you can compare the effects of market volatilities on CECO Environmental and TOPTB 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 TOPTB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and TOPTB.

Diversification Opportunities for CECO Environmental and TOPTB

0.73

Correlation Coefficient

CECO Environmental  TOPTB

Poor diversification

The 3 months correlation between CECO and TOPTB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and TOPTB 5375 20 NOV 48 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPTB 5375 20 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 TOPTB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPTB 5375 20 has no effect on the direction of CECO Environmental i.e., CECO Environmental and TOPTB go up and down completely randomly.

Pair Corralation between CECO Environmental and TOPTB

Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the TOPTB. But the stock apears to be less risky and, when comparing its historical volatility, CECO Environmental Corp is 1.14 times less risky than TOPTB. The stock trades about -0.14 of its potential returns per unit of risk. The TOPTB 5375 20 NOV 48 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,187  in TOPTB 5375 20 NOV 48 on December 29, 2024 and sell it today you would lose (241.00) from holding TOPTB 5375 20 NOV 48 or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	37.7%
Values	Daily Returns

CECO Environmental Corp  vs.  TOPTB 5375 20 NOV 48

CECO Environmental Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CECO Environmental Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

TOPTB 5375 20

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOPTB 5375 20 NOV 48 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TOPTB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CECO Environmental and TOPTB

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

The idea behind CECO Environmental Corp and TOPTB 5375 20 NOV 48 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.