Correlation Between CECO Environmental and Hitachi Zosen
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Hitachi Zosen 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 Hitachi Zosen 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 Hitachi Zosen, you can compare the effects of market volatilities on CECO Environmental and Hitachi Zosen 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 Hitachi Zosen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Hitachi Zosen.
Diversification Opportunities for CECO Environmental and Hitachi Zosen
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CECO and Hitachi is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Hitachi Zosen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Zosen 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 Hitachi Zosen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Zosen has no effect on the direction of CECO Environmental i.e., CECO Environmental and Hitachi Zosen go up and down completely randomly.
Pair Corralation between CECO Environmental and Hitachi Zosen
Assuming the 90 days horizon CECO Environmental Corp is expected to under-perform the Hitachi Zosen. In addition to that, CECO Environmental is 1.24 times more volatile than Hitachi Zosen. It trades about -0.13 of its total potential returns per unit of risk. Hitachi Zosen is currently generating about 0.01 per unit of volatility. If you would invest 592.00 in Hitachi Zosen on December 28, 2024 and sell it today you would earn a total of 1.00 from holding Hitachi Zosen or generate 0.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.41% |
Values | Daily Returns |
CECO Environmental Corp vs. Hitachi Zosen
Performance |
Timeline |
CECO Environmental Corp |
Hitachi Zosen |
CECO Environmental and Hitachi Zosen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CECO Environmental and Hitachi Zosen
The main advantage of trading using opposite CECO Environmental and Hitachi Zosen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Hitachi Zosen 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 Hitachi Zosen will offset losses from the drop in Hitachi Zosen's long position.CECO Environmental vs. JLF INVESTMENT | CECO Environmental vs. SLR Investment Corp | CECO Environmental vs. Japan Asia Investment | CECO Environmental vs. Aedas Homes SA |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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