Correlation Between CECO Environmental and Xunlei

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

Diversification Opportunities for CECO Environmental and Xunlei

-0.86

Correlation Coefficient

CECO Environmental  Xunlei

Pay attention - limited upside

The 3 months correlation between CECO and Xunlei is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Xunlei Ltd Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xunlei Ltd Adr 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 Xunlei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xunlei Ltd Adr has no effect on the direction of CECO Environmental i.e., CECO Environmental and Xunlei go up and down completely randomly.

Pair Corralation between CECO Environmental and Xunlei

Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the Xunlei. But the stock apears to be less risky and, when comparing its historical volatility, CECO Environmental Corp is 2.41 times less risky than Xunlei. The stock trades about -0.13 of its potential returns per unit of risk. The Xunlei Ltd Adr is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  199.00  in Xunlei Ltd Adr on December 19, 2024 and sell it today you would earn a total of  249.00  from holding Xunlei Ltd Adr or generate 125.13% return on investment over 90 days.

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

CECO Environmental Corp  vs.  Xunlei Ltd Adr

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.

Xunlei Ltd Adr

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CECO Environmental and Xunlei

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

The idea behind CECO Environmental Corp and Xunlei Ltd Adr 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.