Correlation Between CompoSecure and Celestica

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

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

Diversification Opportunities for CompoSecure and Celestica

0.59

Correlation Coefficient

CompoSecure  Celestica

Very weak diversification

The 3 months correlation between CompoSecure and Celestica is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and CompoSecure 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 CompoSecure are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of CompoSecure i.e., CompoSecure and Celestica go up and down completely randomly.

Pair Corralation between CompoSecure and Celestica

Given the investment horizon of 90 days CompoSecure is expected to generate 0.63 times more return on investment than Celestica. However, CompoSecure is 1.59 times less risky than Celestica. It trades about -0.09 of its potential returns per unit of risk. Celestica is currently generating about -0.06 per unit of risk. If you would invest  686.00  in CompoSecure on January 26, 2024 and sell it today you would lose (26.00) from holding CompoSecure or give up 3.79% of portfolio value over 90 days.

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

CompoSecure  vs.  Celestica

CompoSecure

Risk-Adjusted Performance

5 of 100

Modest

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

Celestica

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CompoSecure and Celestica

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

The idea behind CompoSecure and Celestica 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.