Correlation Between CompoSecure and Spring Valley

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

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

Diversification Opportunities for CompoSecure and Spring Valley

-0.01

Correlation Coefficient

CompoSecure  Spring Valley

Good diversification

The 3 months correlation between CompoSecure and Spring is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of CompoSecure i.e., CompoSecure and Spring Valley go up and down completely randomly.

Pair Corralation between CompoSecure and Spring Valley

Assuming the 90 days horizon CompoSecure is expected to generate 128.01 times more return on investment than Spring Valley. However, CompoSecure is 128.01 times more volatile than Spring Valley Acquisition. It trades about 0.09 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about 0.02 per unit of risk. If you would invest  142.00  in CompoSecure on October 10, 2024 and sell it today you would earn a total of  282.00  from holding CompoSecure or generate 198.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.58%
Values	Daily Returns

CompoSecure  vs.  Spring Valley Acquisition

CompoSecure

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 5 (%) 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.

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CompoSecure and Spring Valley

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

The idea behind CompoSecure and Spring Valley Acquisition 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.