Correlation Between CompoSecure and Aldel Financial

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

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

Diversification Opportunities for CompoSecure and Aldel Financial

-0.2

Correlation Coefficient

CompoSecure  Aldel Financial

Good diversification

The 3 months correlation between CompoSecure and Aldel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and CompoSecure 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 CompoSecure are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of CompoSecure i.e., CompoSecure and Aldel Financial go up and down completely randomly.

Pair Corralation between CompoSecure and Aldel Financial

Assuming the 90 days horizon CompoSecure is expected to under-perform the Aldel Financial. In addition to that, CompoSecure is 62.29 times more volatile than Aldel Financial II. It trades about -0.09 of its total potential returns per unit of risk. Aldel Financial II is currently generating about 0.23 per unit of volatility. If you would invest  993.00  in Aldel Financial II on October 24, 2024 and sell it today you would earn a total of  4.00  from holding Aldel Financial II or generate 0.4% return on investment over 90 days.

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

CompoSecure  vs.  Aldel Financial II

CompoSecure

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aldel Financial II

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CompoSecure and Aldel Financial

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

The idea behind CompoSecure and Aldel Financial II 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.