Correlation Between CompoSecure and CompoSecure

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

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

Diversification Opportunities for CompoSecure and CompoSecure

0.67

Correlation Coefficient

CompoSecure  CompoSecure

Poor diversification

The 3 months correlation between CompoSecure and CompoSecure is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of CompoSecure i.e., CompoSecure and CompoSecure go up and down completely randomly.

Pair Corralation between CompoSecure and CompoSecure

Assuming the 90 days horizon CompoSecure is expected to generate 2.3 times more return on investment than CompoSecure. However, CompoSecure is 2.3 times more volatile than CompoSecure. It trades about -0.02 of its potential returns per unit of risk. CompoSecure is currently generating about -0.07 per unit of risk. If you would invest  497.00  in CompoSecure on December 30, 2024 and sell it today you would lose (117.00) from holding CompoSecure or give up 23.54% of portfolio value over 90 days.

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

CompoSecure  vs.  CompoSecure

CompoSecure

Risk-Adjusted Performance

Very Weak

Over the last 90 days CompoSecure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

CompoSecure

Risk-Adjusted Performance

Very Weak

Over the last 90 days CompoSecure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CompoSecure and CompoSecure

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

The idea behind CompoSecure and CompoSecure 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.