Correlation Between VerifyMe and CompX International

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

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

Diversification Opportunities for VerifyMe and CompX International

-0.43

Correlation Coefficient

VerifyMe  CompX International

Very good diversification

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

Pair Corralation between VerifyMe and CompX International

Assuming the 90 days horizon VerifyMe is expected to generate 4.9 times more return on investment than CompX International. However, VerifyMe is 4.9 times more volatile than CompX International. It trades about 0.12 of its potential returns per unit of risk. CompX International is currently generating about 0.06 per unit of risk. If you would invest  3.85  in VerifyMe on February 28, 2024 and sell it today you would earn a total of  0.17  from holding VerifyMe or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	53.13%
Values	Daily Returns

VerifyMe  vs.  CompX International

VerifyMe

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VerifyMe are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, VerifyMe showed solid returns over the last few months and may actually be approaching a breakup point.

CompX International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CompX International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, CompX International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VerifyMe and CompX International

The main advantage of trading using opposite VerifyMe and CompX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VerifyMe 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 VerifyMe 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.