Correlation Between Tianjin Capital and CECO Environmental

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

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

Diversification Opportunities for Tianjin Capital and CECO Environmental

-0.58

Correlation Coefficient

Tianjin Capital  CECO Environmental

Excellent diversification

The 3 months correlation between Tianjin and CECO is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental 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 Tianjin Capital 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 Tianjin Capital Environmental 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 Tianjin Capital i.e., Tianjin Capital and CECO Environmental go up and down completely randomly.

Pair Corralation between Tianjin Capital and CECO Environmental

Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 1.96 times more return on investment than CECO Environmental. However, Tianjin Capital is 1.96 times more volatile than CECO Environmental Corp. It trades about 0.07 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.06 per unit of risk. If you would invest  8.09  in Tianjin Capital Environmental on August 2, 2024 and sell it today you would earn a total of  29.91  from holding Tianjin Capital Environmental or generate 369.72% return on investment over 90 days.

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

Tianjin Capital Environmental  vs.  CECO Environmental Corp

Tianjin Capital Envi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Tianjin Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

CECO Environmental Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CECO Environmental Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Tianjin Capital and CECO Environmental

The main advantage of trading using opposite Tianjin Capital and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital 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 Tianjin Capital Environmental 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..