Correlation Between KURITA WTR and CECO Environmental

Can any of the company-specific risk be diversified away by investing in both KURITA WTR and CECO Environmental 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 KURITA WTR and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KURITA WTR INDUNSPADR and CECO Environmental Corp, you can compare the effects of market volatilities on KURITA WTR and CECO Environmental 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 KURITA WTR with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of KURITA WTR and CECO Environmental.

Diversification Opportunities for KURITA WTR and CECO Environmental

-0.15

Correlation Coefficient

KURITA WTR  CECO Environmental

Good diversification

The 3 months correlation between KURITA and CECO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding KURITA WTR INDUNSPADR and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and KURITA WTR 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 KURITA WTR INDUNSPADR are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of KURITA WTR i.e., KURITA WTR and CECO Environmental go up and down completely randomly.

Pair Corralation between KURITA WTR and CECO Environmental

Assuming the 90 days trading horizon KURITA WTR INDUNSPADR is expected to under-perform the CECO Environmental. But the stock apears to be less risky and, when comparing its historical volatility, KURITA WTR INDUNSPADR is 1.55 times less risky than CECO Environmental. The stock trades about 0.0 of its potential returns per unit of risk. The CECO Environmental Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,330  in CECO Environmental Corp on October 3, 2024 and sell it today you would earn a total of  1,452  from holding CECO Environmental Corp or generate 109.17% return on investment over 90 days.

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

KURITA WTR INDUNSPADR  vs.  CECO Environmental Corp

KURITA WTR INDUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KURITA WTR INDUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite nearly unsteady basic indicators, CECO Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KURITA WTR and CECO Environmental

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

The idea behind KURITA WTR INDUNSPADR and CECO Environmental Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.