Correlation Between Innovation Beverage and CompoSecure

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Can any of the company-specific risk be diversified away by investing in both Innovation Beverage 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 Innovation Beverage and CompoSecure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovation Beverage Group and CompoSecure, you can compare the effects of market volatilities on Innovation Beverage 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 Innovation Beverage with a short position of CompoSecure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovation Beverage and CompoSecure.

Diversification Opportunities for Innovation Beverage and CompoSecure

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Innovation and CompoSecure is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Innovation Beverage Group and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Innovation Beverage 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 Innovation Beverage Group 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 Innovation Beverage i.e., Innovation Beverage and CompoSecure go up and down completely randomly.

Pair Corralation between Innovation Beverage and CompoSecure

Considering the 90-day investment horizon Innovation Beverage is expected to generate 1.31 times less return on investment than CompoSecure. In addition to that, Innovation Beverage is 4.11 times more volatile than CompoSecure. It trades about 0.05 of its total potential returns per unit of risk. CompoSecure is currently generating about 0.29 per unit of volatility. If you would invest  380.00  in CompoSecure on April 30, 2025 and sell it today you would earn a total of  270.00  from holding CompoSecure or generate 71.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Innovation Beverage Group  vs.  CompoSecure

 Performance 
       Timeline  
Innovation Beverage 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Innovation Beverage Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, Innovation Beverage reported solid returns over the last few months and may actually be approaching a breakup point.
CompoSecure 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

Innovation Beverage and CompoSecure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Innovation Beverage and CompoSecure

The main advantage of trading using opposite Innovation Beverage and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovation Beverage 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 Innovation Beverage Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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