Correlation Between CompX International and International Consolidated

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

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

Diversification Opportunities for CompX International and International Consolidated

0.28

Correlation Coefficient

CompX International  International Consolidated

Modest diversification

The 3 months correlation between CompX and International is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and International Consolidated Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of CompX International i.e., CompX International and International Consolidated go up and down completely randomly.

Pair Corralation between CompX International and International Consolidated

Considering the 90-day investment horizon CompX International is expected to generate 348.32 times less return on investment than International Consolidated. But when comparing it to its historical volatility, CompX International is 61.33 times less risky than International Consolidated. It trades about 0.05 of its potential returns per unit of risk. International Consolidated Companies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  40.00  in International Consolidated Companies on September 29, 2024 and sell it today you would lose (37.50) from holding International Consolidated Companies or give up 93.75% of portfolio value over 90 days.

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

CompX International  vs.  International Consolidated Com

CompX International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CompX International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, CompX International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

International Consolidated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CompX International and International Consolidated

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

The idea behind CompX International and International Consolidated Companies 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.