Correlation Between CompoSecure and Ampco Pittsburgh

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

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

Diversification Opportunities for CompoSecure and Ampco Pittsburgh

-0.52

Correlation Coefficient

CompoSecure  Ampco Pittsburgh

Excellent diversification

The 3 months correlation between CompoSecure and Ampco is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Ampco Pittsburgh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampco Pittsburgh 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 Ampco Pittsburgh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampco Pittsburgh has no effect on the direction of CompoSecure i.e., CompoSecure and Ampco Pittsburgh go up and down completely randomly.

Pair Corralation between CompoSecure and Ampco Pittsburgh

Assuming the 90 days horizon CompoSecure is expected to generate 4.5 times more return on investment than Ampco Pittsburgh. However, CompoSecure is 4.5 times more volatile than Ampco Pittsburgh. It trades about 0.09 of its potential returns per unit of risk. Ampco Pittsburgh is currently generating about -0.15 per unit of risk. If you would invest  32.00  in CompoSecure on February 15, 2024 and sell it today you would earn a total of  6.00  from holding CompoSecure or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

CompoSecure  vs.  Ampco Pittsburgh

CompoSecure

Risk-Adjusted Performance

7 of 100

Modest

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

Ampco Pittsburgh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampco Pittsburgh has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CompoSecure and Ampco Pittsburgh

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

The idea behind CompoSecure and Ampco Pittsburgh 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.