Correlation Between CECO Environmental and Solidion Technology
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Solidion Technology 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 Solidion Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO Environmental Corp and Solidion Technology, you can compare the effects of market volatilities on CECO Environmental and Solidion Technology 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 Solidion Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Solidion Technology.
Diversification Opportunities for CECO Environmental and Solidion Technology
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CECO and Solidion is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Solidion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solidion Technology 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 Corp are associated (or correlated) with Solidion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solidion Technology has no effect on the direction of CECO Environmental i.e., CECO Environmental and Solidion Technology go up and down completely randomly.
Pair Corralation between CECO Environmental and Solidion Technology
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.29 times more return on investment than Solidion Technology. However, CECO Environmental Corp is 3.41 times less risky than Solidion Technology. It trades about -0.04 of its potential returns per unit of risk. Solidion Technology is currently generating about -0.05 per unit of risk. If you would invest 2,368 in CECO Environmental Corp on February 5, 2024 and sell it today you would lose (123.00) from holding CECO Environmental Corp or give up 5.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CECO Environmental Corp vs. Solidion Technology
Performance |
Timeline |
CECO Environmental Corp |
Solidion Technology |
CECO Environmental and Solidion Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CECO Environmental and Solidion Technology
The main advantage of trading using opposite CECO Environmental and Solidion Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Solidion Technology 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 Solidion Technology will offset losses from the drop in Solidion Technology's long position.CECO Environmental vs. Federal Signal | CECO Environmental vs. 374Water Common Stock | CECO Environmental vs. CO2 Solutions |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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