Correlation Between Haynes International and CompoSecure

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

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

Diversification Opportunities for Haynes International and CompoSecure

0.43

Correlation Coefficient

Haynes International  CompoSecure

Very weak diversification

The 3 months correlation between Haynes and CompoSecure is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Haynes International and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Haynes International 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 Haynes International 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 Haynes International i.e., Haynes International and CompoSecure go up and down completely randomly.

Pair Corralation between Haynes International and CompoSecure

Given the investment horizon of 90 days Haynes International is expected to generate 22.45 times less return on investment than CompoSecure. But when comparing it to its historical volatility, Haynes International is 8.48 times less risky than CompoSecure. It trades about 0.08 of its potential returns per unit of risk. CompoSecure is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,173  in CompoSecure on August 30, 2024 and sell it today you would earn a total of  444.00  from holding CompoSecure or generate 37.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Haynes International  vs.  CompoSecure

Haynes International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haynes International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Haynes International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CompoSecure

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CompoSecure displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Haynes International and CompoSecure

The main advantage of trading using opposite Haynes International and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haynes International 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 Haynes International 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.

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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.