Correlation Between Electronic Control and CompX International
Can any of the company-specific risk be diversified away by investing in both Electronic Control 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 Electronic Control and CompX International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Control Security and CompX International, you can compare the effects of market volatilities on Electronic Control 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 Electronic Control with a short position of CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Control and CompX International.
Diversification Opportunities for Electronic Control and CompX International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Electronic and CompX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Control Security and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International and Electronic Control 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 Electronic Control Security 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 Electronic Control i.e., Electronic Control and CompX International go up and down completely randomly.
Pair Corralation between Electronic Control and CompX International
Given the investment horizon of 90 days Electronic Control Security is expected to generate 4.76 times more return on investment than CompX International. However, Electronic Control is 4.76 times more volatile than CompX International. It trades about 0.05 of its potential returns per unit of risk. CompX International is currently generating about 0.07 per unit of risk. If you would invest 3.00 in Electronic Control Security on January 24, 2024 and sell it today you would lose (2.65) from holding Electronic Control Security or give up 88.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Control Security vs. CompX International
Performance |
| Timeline |
| Electronic Control |
| CompX International |
Electronic Control and CompX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Control and CompX International
The main advantage of trading using opposite Electronic Control and CompX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Control 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.| Electronic Control vs. Trust Stamp | Electronic Control vs. Infobird Co | Electronic Control vs. Versus Systems | Electronic Control vs. MMTEC Inc |
| CompX International vs. Allegion PLC | CompX International vs. Resideo Technologies | CompX International vs. Mistras Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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