Correlation Between CompoSecure and Suntory Beverage

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

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

Diversification Opportunities for CompoSecure and Suntory Beverage

-0.57

Correlation Coefficient

CompoSecure  Suntory Beverage

Excellent diversification

The 3 months correlation between CompoSecure and Suntory is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of CompoSecure i.e., CompoSecure and Suntory Beverage go up and down completely randomly.

Pair Corralation between CompoSecure and Suntory Beverage

Assuming the 90 days horizon CompoSecure is expected to generate 43.31 times more return on investment than Suntory Beverage. However, CompoSecure is 43.31 times more volatile than Suntory Beverage Food. It trades about 0.09 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about -0.02 per unit of risk. If you would invest  60.00  in CompoSecure on October 9, 2024 and sell it today you would earn a total of  364.00  from holding CompoSecure or generate 606.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

CompoSecure  vs.  Suntory Beverage Food

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.

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CompoSecure and Suntory Beverage

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

The idea behind CompoSecure and Suntory Beverage Food 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.