Correlation Between CompX International and Secom Co
Can any of the company-specific risk be diversified away by investing in both CompX International and Secom Co 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 CompX International and Secom Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompX International and Secom Co Ltd, you can compare the effects of market volatilities on CompX International and Secom Co 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 CompX International with a short position of Secom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompX International and Secom Co.
Diversification Opportunities for CompX International and Secom Co
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CompX and Secom is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and Secom Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secom Co and CompX 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 CompX International are associated (or correlated) with Secom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secom Co has no effect on the direction of CompX International i.e., CompX International and Secom Co go up and down completely randomly.
Pair Corralation between CompX International and Secom Co
Considering the 90-day investment horizon CompX International is expected to generate 2.65 times more return on investment than Secom Co. However, CompX International is 2.65 times more volatile than Secom Co Ltd. It trades about 0.05 of its potential returns per unit of risk. Secom Co Ltd is currently generating about 0.01 per unit of risk. If you would invest 1,858 in CompX International on January 26, 2024 and sell it today you would earn a total of 1,369 from holding CompX International or generate 73.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompX International vs. Secom Co Ltd
Performance |
| Timeline |
| CompX International |
| Secom Co |
CompX International and Secom Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompX International and Secom Co
The main advantage of trading using opposite CompX International and Secom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompX International position performs unexpectedly, Secom Co 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 Secom Co will offset losses from the drop in Secom Co's long position.| CompX International vs. NL Industries | CompX International vs. Eastern Co | CompX International vs. CF Financial | CompX International vs. Bar Harbor Bankshares |
Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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