Correlation Between CECO ENVIRONMENTAL and AptarGroup

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

By analyzing existing cross correlation between CECO ENVIRONMENTAL and AptarGroup, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and AptarGroup 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 AptarGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and AptarGroup.

Diversification Opportunities for CECO ENVIRONMENTAL and AptarGroup

0.87

Correlation Coefficient

CECO ENVIRONMENTAL  AptarGroup

Very poor diversification

The 3 months correlation between CECO and AptarGroup is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup 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 are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and AptarGroup go up and down completely randomly.

Pair Corralation between CECO ENVIRONMENTAL and AptarGroup

Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to under-perform the AptarGroup. In addition to that, CECO ENVIRONMENTAL is 2.38 times more volatile than AptarGroup. It trades about -0.08 of its total potential returns per unit of risk. AptarGroup is currently generating about -0.09 per unit of volatility. If you would invest  15,065  in AptarGroup on December 30, 2024 and sell it today you would lose (1,265) from holding AptarGroup or give up 8.4% of portfolio value over 90 days.

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

CECO ENVIRONMENTAL  vs.  AptarGroup

CECO ENVIRONMENTAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days CECO ENVIRONMENTAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AptarGroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CECO ENVIRONMENTAL and AptarGroup

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

The idea behind CECO ENVIRONMENTAL and AptarGroup 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.