Correlation Between Cellebrite and CompoSecure

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

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

Diversification Opportunities for Cellebrite and CompoSecure

-0.06

Correlation Coefficient

Cellebrite  CompoSecure

Good diversification

The 3 months correlation between Cellebrite and CompoSecure is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cellebrite DI Equity and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Cellebrite 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 Cellebrite DI Equity 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 Cellebrite i.e., Cellebrite and CompoSecure go up and down completely randomly.

Pair Corralation between Cellebrite and CompoSecure

Assuming the 90 days horizon Cellebrite is expected to generate 2.03 times less return on investment than CompoSecure. In addition to that, Cellebrite is 3.08 times more volatile than CompoSecure. It trades about 0.01 of its total potential returns per unit of risk. CompoSecure is currently generating about 0.04 per unit of volatility. If you would invest  703.00  in CompoSecure on February 4, 2024 and sell it today you would earn a total of  8.00  from holding CompoSecure or generate 1.14% return on investment over 90 days.

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

Cellebrite DI Equity  vs.  CompoSecure

Cellebrite DI Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cellebrite DI Equity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Cellebrite showed solid returns over the last few months and may actually be approaching a breakup point.

CompoSecure

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CompoSecure displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cellebrite and CompoSecure

The main advantage of trading using opposite Cellebrite and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellebrite 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 Cellebrite DI Equity 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..