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, 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

0.68

Correlation Coefficient

Infrastrutture Wireless  CECO ENVIRONMENTAL

Poor diversification

The 3 months correlation between Infrastrutture and CECO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia and CECO ENVIRONMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO ENVIRONMENTAL 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 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 0.43 times more return on investment than CECO ENVIRONMENTAL. However, Infrastrutture Wireless Italiane is 2.34 times less risky than CECO ENVIRONMENTAL. It trades about -0.03 of its potential returns per unit of risk. CECO ENVIRONMENTAL is currently generating about -0.08 per unit of risk. If you would invest  978.00  in Infrastrutture Wireless Italiane on December 29, 2024 and sell it today you would lose (35.00) from holding Infrastrutture Wireless Italiane or give up 3.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Infrastrutture Wireless Italia  vs.  CECO ENVIRONMENTAL

Infrastrutture Wireless

Risk-Adjusted Performance

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 nearly stable basic indicators, Infrastrutture Wireless is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

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 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.