Correlation Between CompX International and Mistras

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

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

Diversification Opportunities for CompX International and Mistras

0.11

Correlation Coefficient

CompX International  Mistras

Average diversification

The 3 months correlation between CompX and Mistras is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Mistras Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mistras Group 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 Mistras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mistras Group has no effect on the direction of CompX International i.e., CompX International and Mistras go up and down completely randomly.

Pair Corralation between CompX International and Mistras

Considering the 90-day investment horizon CompX International is expected to generate 1.04 times more return on investment than Mistras. However, CompX International is 1.04 times more volatile than Mistras Group. It trades about 0.0 of its potential returns per unit of risk. Mistras Group is currently generating about -0.08 per unit of risk. If you would invest  2,956  in CompX International on August 30, 2024 and sell it today you would lose (179.00) from holding CompX International or give up 6.06% of portfolio value over 90 days.

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

CompX International  vs.  Mistras Group

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CompX International and Mistras

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

The idea behind CompX International and Mistras Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.