Correlation Between Ryerson Holding and CompoSecure

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

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

Diversification Opportunities for Ryerson Holding and CompoSecure

-0.27

Correlation Coefficient

Ryerson Holding  CompoSecure

Very good diversification

The 3 months correlation between Ryerson and CompoSecure is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ryerson Holding Corp and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Ryerson Holding 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 Ryerson Holding Corp 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 Ryerson Holding i.e., Ryerson Holding and CompoSecure go up and down completely randomly.

Pair Corralation between Ryerson Holding and CompoSecure

Considering the 90-day investment horizon Ryerson Holding Corp is expected to under-perform the CompoSecure. In addition to that, Ryerson Holding is 1.73 times more volatile than CompoSecure. It trades about -0.5 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

Ryerson Holding Corp  vs.  CompoSecure

Ryerson Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryerson Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 unfluctuating basic indicators, CompoSecure displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ryerson Holding and CompoSecure

The main advantage of trading using opposite Ryerson Holding and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryerson Holding 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 Ryerson Holding Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.