Correlation Between CompoSecure and 512807AV0

Can any of the company-specific risk be diversified away by investing in both CompoSecure and 512807AV0 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 512807AV0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompoSecure and LAM RESEARCH PORATION, you can compare the effects of market volatilities on CompoSecure and 512807AV0 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 512807AV0. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and 512807AV0.

Diversification Opportunities for CompoSecure and 512807AV0

-0.27

Correlation Coefficient

CompoSecure  512807AV0

Very good diversification

The 3 months correlation between CompoSecure and 512807AV0 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and LAM RESEARCH PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAM RESEARCH PORATION 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 512807AV0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAM RESEARCH PORATION has no effect on the direction of CompoSecure i.e., CompoSecure and 512807AV0 go up and down completely randomly.

Pair Corralation between CompoSecure and 512807AV0

Assuming the 90 days horizon CompoSecure is expected to generate 17.08 times more return on investment than 512807AV0. However, CompoSecure is 17.08 times more volatile than LAM RESEARCH PORATION. It trades about 0.06 of its potential returns per unit of risk. LAM RESEARCH PORATION is currently generating about -0.12 per unit of risk. If you would invest  396.00  in CompoSecure on October 9, 2024 and sell it today you would earn a total of  47.00  from holding CompoSecure or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

CompoSecure  vs.  LAM RESEARCH PORATION

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.

LAM RESEARCH PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAM RESEARCH PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 512807AV0 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CompoSecure and 512807AV0

The main advantage of trading using opposite CompoSecure and 512807AV0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure position performs unexpectedly, 512807AV0 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 512807AV0 will offset losses from the drop in 512807AV0's long position.

The idea behind CompoSecure and LAM RESEARCH PORATION 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.