Correlation Between Suntory Beverage and CompoSecure

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

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

Diversification Opportunities for Suntory Beverage and CompoSecure

-0.57

Correlation Coefficient

Suntory Beverage  CompoSecure

Excellent diversification

The 3 months correlation between Suntory and CompoSecure is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Suntory 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 Suntory Beverage Food 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 Suntory Beverage i.e., Suntory Beverage and CompoSecure go up and down completely randomly.

Pair Corralation between Suntory Beverage and CompoSecure

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the CompoSecure. But the pink sheet apears to be less risky and, when comparing its historical volatility, Suntory Beverage Food is 43.31 times less risky than CompoSecure. The pink sheet trades about -0.02 of its potential returns per unit of risk. The CompoSecure is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Suntory Beverage Food  vs.  CompoSecure

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Suntory Beverage and CompoSecure

The main advantage of trading using opposite Suntory Beverage and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory 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 Suntory Beverage Food 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.