Correlation Between Modular Medical and CECO Environmental

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

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

Diversification Opportunities for Modular Medical and CECO Environmental

-0.49

Correlation Coefficient

Modular Medical  CECO Environmental

Very good diversification

The 3 months correlation between Modular and CECO is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Modular Medical 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 Modular Medical 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 Modular Medical 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 Modular Medical i.e., Modular Medical and CECO Environmental go up and down completely randomly.

Pair Corralation between Modular Medical and CECO Environmental

Given the investment horizon of 90 days Modular Medical is expected to under-perform the CECO Environmental. In addition to that, Modular Medical is 1.35 times more volatile than CECO Environmental Corp. It trades about -0.03 of its total potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.28 per unit of volatility. If you would invest  2,823  in CECO Environmental Corp on May 28, 2025 and sell it today you would earn a total of  1,975  from holding CECO Environmental Corp or generate 69.96% return on investment over 90 days.

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

Modular Medical  vs.  CECO Environmental Corp

Modular Medical

Risk-Adjusted Performance

Weakest

Over the last 90 days Modular Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CECO Environmental Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, CECO Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Modular Medical and CECO Environmental

The main advantage of trading using opposite Modular Medical and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modular Medical 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 Modular Medical 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 Stocks Directory module to find actively traded stocks across global markets.