Correlation Between Compass Diversified and Mytilineos

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

By analyzing existing cross correlation between Compass Diversified Holdings and Mytilineos SA, you can compare the effects of market volatilities on Compass Diversified and Mytilineos 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 Compass Diversified with a short position of Mytilineos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Diversified and Mytilineos.

Diversification Opportunities for Compass Diversified and Mytilineos

-0.9

Correlation Coefficient

Compass Diversified  Mytilineos

Pay attention - limited upside

The 3 months correlation between Compass and Mytilineos is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings and Mytilineos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos SA and Compass Diversified 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 Compass Diversified Holdings are associated (or correlated) with Mytilineos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos SA has no effect on the direction of Compass Diversified i.e., Compass Diversified and Mytilineos go up and down completely randomly.

Pair Corralation between Compass Diversified and Mytilineos

Given the investment horizon of 90 days Compass Diversified Holdings is expected to generate 1.41 times more return on investment than Mytilineos. However, Compass Diversified is 1.41 times more volatile than Mytilineos SA. It trades about 0.03 of its potential returns per unit of risk. Mytilineos SA is currently generating about -0.04 per unit of risk. If you would invest  2,093  in Compass Diversified Holdings on October 7, 2024 and sell it today you would earn a total of  197.00  from holding Compass Diversified Holdings or generate 9.41% return on investment over 90 days.

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

Compass Diversified Holdings  vs.  Mytilineos SA

Compass Diversified

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Diversified Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, Compass Diversified may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mytilineos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mytilineos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Mytilineos is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compass Diversified and Mytilineos

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

The idea behind Compass Diversified Holdings and Mytilineos SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.