Correlation Between Infrastrutture Wireless and CECO Environmental

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

By analyzing existing cross correlation between Infrastrutture Wireless Italiane and CECO Environmental Corp, you can compare the effects of market volatilities on Infrastrutture Wireless and CECO Environmental 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 Infrastrutture Wireless with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infrastrutture Wireless and CECO Environmental.

Diversification Opportunities for Infrastrutture Wireless and CECO Environmental

-0.44

Correlation Coefficient

Infrastrutture Wireless  CECO Environmental

Very good diversification

The 3 months correlation between Infrastrutture and CECO is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and Infrastrutture Wireless 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 Infrastrutture Wireless Italiane are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of Infrastrutture Wireless i.e., Infrastrutture Wireless and CECO Environmental go up and down completely randomly.

Pair Corralation between Infrastrutture Wireless and CECO Environmental

Assuming the 90 days horizon Infrastrutture Wireless Italiane is expected to generate 0.4 times more return on investment than CECO Environmental. However, Infrastrutture Wireless Italiane is 2.47 times less risky than CECO Environmental. It trades about 0.06 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about -0.02 per unit of risk. If you would invest  981.00  in Infrastrutture Wireless Italiane on October 9, 2024 and sell it today you would earn a total of  10.00  from holding Infrastrutture Wireless Italiane or generate 1.02% return on investment over 90 days.

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

Infrastrutture Wireless Italia  vs.  CECO Environmental Corp

Infrastrutture Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infrastrutture Wireless Italiane has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

CECO Environmental Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CECO Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infrastrutture Wireless and CECO Environmental

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

The idea behind Infrastrutture Wireless Italiane and CECO Environmental Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.