Correlation Between CECO Environmental and AgrifyCorp

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and AgrifyCorp 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 AgrifyCorp 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 AgrifyCorp, you can compare the effects of market volatilities on CECO Environmental and AgrifyCorp 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 AgrifyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and AgrifyCorp.

Diversification Opportunities for CECO Environmental and AgrifyCorp

-0.82

Correlation Coefficient

CECO Environmental  AgrifyCorp

Pay attention - limited upside

The 3 months correlation between CECO and AgrifyCorp is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and AgrifyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgrifyCorp 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 AgrifyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgrifyCorp has no effect on the direction of CECO Environmental i.e., CECO Environmental and AgrifyCorp go up and down completely randomly.

Pair Corralation between CECO Environmental and AgrifyCorp

Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.24 times more return on investment than AgrifyCorp. However, CECO Environmental Corp is 4.09 times less risky than AgrifyCorp. It trades about 0.17 of its potential returns per unit of risk. AgrifyCorp is currently generating about -0.13 per unit of risk. If you would invest  2,265  in CECO Environmental Corp on January 25, 2024 and sell it today you would earn a total of  162.00  from holding CECO Environmental Corp or generate 7.15% return on investment over 90 days.

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

CECO Environmental Corp  vs.  AgrifyCorp

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. In spite of very uncertain fundamental indicators, CECO Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

AgrifyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AgrifyCorp 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CECO Environmental and AgrifyCorp

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

The idea behind CECO Environmental Corp and AgrifyCorp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.