Correlation Between Kaufman Broad and CECO Environmental

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

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

Diversification Opportunities for Kaufman Broad and CECO Environmental

0.43

Correlation Coefficient

Kaufman Broad  CECO Environmental

Very weak diversification

The 3 months correlation between Kaufman and CECO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kaufman Broad SA 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 Kaufman Broad 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 Kaufman Broad SA 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 Kaufman Broad i.e., Kaufman Broad and CECO Environmental go up and down completely randomly.

Pair Corralation between Kaufman Broad and CECO Environmental

Assuming the 90 days horizon Kaufman Broad is expected to generate 30.36 times less return on investment than CECO Environmental. But when comparing it to its historical volatility, Kaufman Broad SA is 1.99 times less risky than CECO Environmental. It trades about 0.02 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,622  in CECO Environmental Corp on April 24, 2025 and sell it today you would earn a total of  1,044  from holding CECO Environmental Corp or generate 64.36% return on investment over 90 days.

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

Kaufman Broad SA  vs.  CECO Environmental Corp

Kaufman Broad SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaufman Broad SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kaufman Broad is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CECO Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaufman Broad and CECO Environmental

The main advantage of trading using opposite Kaufman Broad and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaufman Broad 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 Kaufman Broad SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.