Correlation Between CECO Environmental and Munters Group

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

Diversification Opportunities for CECO Environmental and Munters Group

0.71

Correlation Coefficient

CECO Environmental  Munters Group

Poor diversification

The 3 months correlation between CECO and Munters is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Munters Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munters Group AB 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 Munters Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munters Group AB has no effect on the direction of CECO Environmental i.e., CECO Environmental and Munters Group go up and down completely randomly.

Pair Corralation between CECO Environmental and Munters Group

Assuming the 90 days horizon CECO Environmental Corp is expected to generate 0.87 times more return on investment than Munters Group. However, CECO Environmental Corp is 1.14 times less risky than Munters Group. It trades about 0.2 of its potential returns per unit of risk. Munters Group AB is currently generating about 0.06 per unit of risk. If you would invest  2,438  in CECO Environmental Corp on April 23, 2025 and sell it today you would earn a total of  228.00  from holding CECO Environmental Corp or generate 9.35% return on investment over 90 days.

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

CECO Environmental Corp  vs.  Munters Group AB

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.

Munters Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Munters Group AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Munters Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CECO Environmental and Munters Group

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

The idea behind CECO Environmental Corp and Munters Group AB 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.