Correlation Between CECO ENVIRONMENTAL and LANSON-BCC INH

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

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

Diversification Opportunities for CECO ENVIRONMENTAL and LANSON-BCC INH

-0.84

Correlation Coefficient

CECO ENVIRONMENTAL  LANSON-BCC INH

Pay attention - limited upside

The 3 months correlation between CECO and LANSON-BCC is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and LANSON BCC INH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANSON BCC INH 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 LANSON-BCC INH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANSON BCC INH has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and LANSON-BCC INH go up and down completely randomly.

Pair Corralation between CECO ENVIRONMENTAL and LANSON-BCC INH

Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 2.79 times more return on investment than LANSON-BCC INH. However, CECO ENVIRONMENTAL is 2.79 times more volatile than LANSON BCC INH EO. It trades about 0.11 of its potential returns per unit of risk. LANSON BCC INH EO is currently generating about -0.16 per unit of risk. If you would invest  2,462  in CECO ENVIRONMENTAL on October 6, 2024 and sell it today you would earn a total of  598.00  from holding CECO ENVIRONMENTAL or generate 24.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

CECO ENVIRONMENTAL  vs.  LANSON BCC INH EO

CECO ENVIRONMENTAL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CECO ENVIRONMENTAL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CECO ENVIRONMENTAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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.

Pair Trading with CECO ENVIRONMENTAL and LANSON-BCC INH

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

The idea behind CECO ENVIRONMENTAL and LANSON BCC INH EO 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.