Correlation Between CECO Environmental and KURITA WTR

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

Diversification Opportunities for CECO Environmental and KURITA WTR

0.75

Correlation Coefficient

CECO Environmental  KURITA WTR

Poor diversification

The 3 months correlation between CECO and KURITA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and KURITA WTR INDUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KURITA WTR INDUNSPADR 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 KURITA WTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KURITA WTR INDUNSPADR has no effect on the direction of CECO Environmental i.e., CECO Environmental and KURITA WTR go up and down completely randomly.

Pair Corralation between CECO Environmental and KURITA WTR

Assuming the 90 days horizon CECO Environmental Corp is expected to generate 1.48 times more return on investment than KURITA WTR. However, CECO Environmental is 1.48 times more volatile than KURITA WTR INDUNSPADR. It trades about 0.26 of its potential returns per unit of risk. KURITA WTR INDUNSPADR is currently generating about 0.08 per unit of risk. 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	Significant
Accuracy	98.44%
Values	Daily Returns

CECO Environmental Corp  vs.  KURITA WTR INDUNSPADR

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.

KURITA WTR INDUNSPADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KURITA WTR INDUNSPADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, KURITA WTR may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CECO Environmental and KURITA WTR

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

The idea behind CECO Environmental Corp and KURITA WTR INDUNSPADR 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 Correlations module to find global opportunities by holding instruments from different markets.