Correlation Between CompX International and AMCON Distributing

Can any of the company-specific risk be diversified away by investing in both CompX International and AMCON Distributing 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 CompX International and AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompX International and AMCON Distributing, you can compare the effects of market volatilities on CompX International and AMCON Distributing 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 CompX International with a short position of AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and AMCON Distributing.

Diversification Opportunities for CompX International and AMCON Distributing

0.3

Correlation Coefficient

CompX International  AMCON Distributing

Weak diversification

The 3 months correlation between CompX and AMCON is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and CompX International 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 CompX International are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of CompX International i.e., CompX International and AMCON Distributing go up and down completely randomly.

Pair Corralation between CompX International and AMCON Distributing

Considering the 90-day investment horizon CompX International is expected to generate 1.35 times more return on investment than AMCON Distributing. However, CompX International is 1.35 times more volatile than AMCON Distributing. It trades about 0.04 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.0 per unit of risk. If you would invest  1,632  in CompX International on October 3, 2024 and sell it today you would earn a total of  983.00  from holding CompX International or generate 60.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.99%
Values	Daily Returns

CompX International  vs.  AMCON Distributing

CompX International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CompX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, CompX International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CompX International and AMCON Distributing

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

The idea behind CompX International and AMCON Distributing 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.