Correlation Between CECO ENVIRONMENTAL and Hawesko Holding

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

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

Diversification Opportunities for CECO ENVIRONMENTAL and Hawesko Holding

-0.16

Correlation Coefficient

CECO ENVIRONMENTAL  Hawesko Holding

Good diversification

The 3 months correlation between CECO and Hawesko is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding AG 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 Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Hawesko Holding go up and down completely randomly.

Pair Corralation between CECO ENVIRONMENTAL and Hawesko Holding

Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.29 times more return on investment than Hawesko Holding. However, CECO ENVIRONMENTAL is 1.29 times more volatile than Hawesko Holding AG. It trades about 0.07 of its potential returns per unit of risk. Hawesko Holding AG is currently generating about 0.01 per unit of risk. If you would invest  2,472  in CECO ENVIRONMENTAL on October 4, 2024 and sell it today you would earn a total of  310.00  from holding CECO ENVIRONMENTAL or generate 12.54% return on investment over 90 days.

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

CECO ENVIRONMENTAL  vs.  Hawesko Holding AG

CECO ENVIRONMENTAL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CECO ENVIRONMENTAL are ranked lower than 5 (%) 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.

Hawesko Holding AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawesko Holding AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hawesko Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CECO ENVIRONMENTAL and Hawesko Holding

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

The idea behind CECO ENVIRONMENTAL and Hawesko Holding AG 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.