Correlation Between CECO ENVIRONMENTAL and HEXAGON AB

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

By analyzing existing cross correlation between CECO ENVIRONMENTAL and HEXAGON AB ADR1, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and HEXAGON AB 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 HEXAGON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and HEXAGON AB.

Diversification Opportunities for CECO ENVIRONMENTAL and HEXAGON AB

-0.64

Correlation Coefficient

CECO ENVIRONMENTAL  HEXAGON AB

Excellent diversification

The 3 months correlation between CECO and HEXAGON is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and HEXAGON AB ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXAGON AB ADR1 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 HEXAGON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXAGON AB ADR1 has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and HEXAGON AB go up and down completely randomly.

Pair Corralation between CECO ENVIRONMENTAL and HEXAGON AB

Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to under-perform the HEXAGON AB. In addition to that, CECO ENVIRONMENTAL is 1.79 times more volatile than HEXAGON AB ADR1. It trades about -0.08 of its total potential returns per unit of risk. HEXAGON AB ADR1 is currently generating about 0.09 per unit of volatility. If you would invest  910.00  in HEXAGON AB ADR1 on December 30, 2024 and sell it today you would earn a total of  100.00  from holding HEXAGON AB ADR1 or generate 10.99% return on investment over 90 days.

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

CECO ENVIRONMENTAL  vs.  HEXAGON AB ADR1

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.

HEXAGON AB ADR1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEXAGON AB ADR1 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, HEXAGON AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CECO ENVIRONMENTAL and HEXAGON AB

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

The idea behind CECO ENVIRONMENTAL and HEXAGON AB ADR1 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.