Correlation Between XCPCNL Business and CompX International

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

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

Diversification Opportunities for XCPCNL Business and CompX International

0.0

Correlation Coefficient

XCPCNL Business  CompX International

Pay attention - limited upside

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

Pair Corralation between XCPCNL Business and CompX International

Given the investment horizon of 90 days XCPCNL Business Services is expected to generate 21.34 times more return on investment than CompX International. However, XCPCNL Business is 21.34 times more volatile than CompX International. It trades about 0.09 of its potential returns per unit of risk. CompX International is currently generating about 0.05 per unit of risk. If you would invest  0.09  in XCPCNL Business Services on September 26, 2024 and sell it today you would lose (0.08) from holding XCPCNL Business Services or give up 88.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

XCPCNL Business Services  vs.  CompX International

XCPCNL Business Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XCPCNL Business Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, XCPCNL Business is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

CompX International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CompX International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, CompX International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with XCPCNL Business and CompX International

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

The idea behind XCPCNL Business Services and CompX International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.