Correlation Between Compeq Manufacturing and Global Brands

Can any of the company-specific risk be diversified away by investing in both Compeq Manufacturing and Global Brands 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 Compeq Manufacturing and Global Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compeq Manufacturing Co and Global Brands Manufacture, you can compare the effects of market volatilities on Compeq Manufacturing and Global Brands 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 Compeq Manufacturing with a short position of Global Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compeq Manufacturing and Global Brands.

Diversification Opportunities for Compeq Manufacturing and Global Brands

-0.03

Correlation Coefficient

Compeq Manufacturing  Global Brands

Good diversification

The 3 months correlation between Compeq and Global is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Compeq Manufacturing Co and Global Brands Manufacture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Brands Manufacture and Compeq Manufacturing 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 Compeq Manufacturing Co are associated (or correlated) with Global Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Brands Manufacture has no effect on the direction of Compeq Manufacturing i.e., Compeq Manufacturing and Global Brands go up and down completely randomly.

Pair Corralation between Compeq Manufacturing and Global Brands

Assuming the 90 days trading horizon Compeq Manufacturing is expected to generate 5.06 times less return on investment than Global Brands. But when comparing it to its historical volatility, Compeq Manufacturing Co is 1.86 times less risky than Global Brands. It trades about 0.05 of its potential returns per unit of risk. Global Brands Manufacture is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,520  in Global Brands Manufacture on December 4, 2024 and sell it today you would earn a total of  1,630  from holding Global Brands Manufacture or generate 29.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

Compeq Manufacturing Co  vs.  Global Brands Manufacture

Compeq Manufacturing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compeq Manufacturing Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compeq Manufacturing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Global Brands Manufacture

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Brands Manufacture are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Global Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compeq Manufacturing and Global Brands

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

The idea behind Compeq Manufacturing Co and Global Brands Manufacture 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.