Correlation Between CECO ENVIRONMENTAL and SIKA AG
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and SIKA AG 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 SIKA AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and SIKA AG UNSPADR, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and SIKA AG 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 SIKA AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and SIKA AG.
Diversification Opportunities for CECO ENVIRONMENTAL and SIKA AG
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CECO and SIKA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and SIKA AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIKA AG UNSPADR 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 SIKA AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIKA AG UNSPADR has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and SIKA AG go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and SIKA AG
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 2.67 times more return on investment than SIKA AG. However, CECO ENVIRONMENTAL is 2.67 times more volatile than SIKA AG UNSPADR. It trades about 0.1 of its potential returns per unit of risk. SIKA AG UNSPADR is currently generating about -0.16 per unit of risk. If you would invest 2,532 in CECO ENVIRONMENTAL on September 16, 2024 and sell it today you would earn a total of 530.00 from holding CECO ENVIRONMENTAL or generate 20.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CECO ENVIRONMENTAL vs. SIKA AG UNSPADR
Performance |
Timeline |
CECO ENVIRONMENTAL |
SIKA AG UNSPADR |
CECO ENVIRONMENTAL and SIKA AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CECO ENVIRONMENTAL and SIKA AG
The main advantage of trading using opposite CECO ENVIRONMENTAL and SIKA AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, SIKA AG 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 SIKA AG will offset losses from the drop in SIKA AG's long position.CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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