Correlation Between SG Blocks and CompoSecure

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

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

Diversification Opportunities for SG Blocks and CompoSecure

-0.4

Correlation Coefficient

SG Blocks  CompoSecure

Very good diversification

The 3 months correlation between SGBX and CompoSecure is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SG Blocks and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and SG Blocks 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 SG Blocks 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 SG Blocks i.e., SG Blocks and CompoSecure go up and down completely randomly.

Pair Corralation between SG Blocks and CompoSecure

Given the investment horizon of 90 days SG Blocks is expected to under-perform the CompoSecure. In addition to that, SG Blocks is 3.88 times more volatile than CompoSecure. It trades about -0.07 of its total potential returns per unit of risk. CompoSecure is currently generating about 0.18 per unit of volatility. If you would invest  1,239  in CompoSecure on September 13, 2024 and sell it today you would earn a total of  407.00  from holding CompoSecure or generate 32.85% return on investment over 90 days.

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

SG Blocks  vs.  CompoSecure

SG Blocks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SG Blocks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CompoSecure

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 14 (%) 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 SG Blocks and CompoSecure

The main advantage of trading using opposite SG Blocks and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SG Blocks 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 SG Blocks 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.