Correlation Between CompoSecure and Q2 Holdings

Can any of the company-specific risk be diversified away by investing in both CompoSecure and Q2 Holdings 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 Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompoSecure and Q2 Holdings, you can compare the effects of market volatilities on CompoSecure and Q2 Holdings 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 Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and Q2 Holdings.

Diversification Opportunities for CompoSecure and Q2 Holdings

0.68

Correlation Coefficient

CompoSecure  Q2 Holdings

Poor diversification

The 3 months correlation between CompoSecure and QTWO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings 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 Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of CompoSecure i.e., CompoSecure and Q2 Holdings go up and down completely randomly.

Pair Corralation between CompoSecure and Q2 Holdings

Assuming the 90 days horizon CompoSecure is expected to under-perform the Q2 Holdings. In addition to that, CompoSecure is 2.61 times more volatile than Q2 Holdings. It trades about -0.23 of its total potential returns per unit of risk. Q2 Holdings is currently generating about -0.24 per unit of volatility. If you would invest  10,645  in Q2 Holdings on October 9, 2024 and sell it today you would lose (791.00) from holding Q2 Holdings or give up 7.43% of portfolio value over 90 days.

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

CompoSecure  vs.  Q2 Holdings

CompoSecure

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

Q2 Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Q2 Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CompoSecure and Q2 Holdings

The main advantage of trading using opposite CompoSecure and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.

The idea behind CompoSecure and Q2 Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.