Correlation Between Fernhill Beverage and CompoSecure

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

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

Diversification Opportunities for Fernhill Beverage and CompoSecure

0.0

Correlation Coefficient

Fernhill Beverage  CompoSecure

Pay attention - limited upside

The 3 months correlation between Fernhill and CompoSecure is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fernhill Beverage and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Fernhill Beverage 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 Fernhill Beverage are associated (or correlated) with CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Fernhill Beverage i.e., Fernhill Beverage and CompoSecure go up and down completely randomly.

Pair Corralation between Fernhill Beverage and CompoSecure

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	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Fernhill Beverage  vs.  CompoSecure

Fernhill Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fernhill Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Fernhill Beverage is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Fernhill Beverage and CompoSecure

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

The idea behind Fernhill Beverage and CompoSecure 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.