Correlation Between Cayson Acquisition and CompoSecure

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

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

Diversification Opportunities for Cayson Acquisition and CompoSecure

-0.2

Correlation Coefficient

Cayson Acquisition  CompoSecure

Good diversification

The 3 months correlation between Cayson and CompoSecure is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cayson Acquisition Corp and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Cayson Acquisition 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 Cayson Acquisition 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 Cayson Acquisition i.e., Cayson Acquisition and CompoSecure go up and down completely randomly.

Pair Corralation between Cayson Acquisition and CompoSecure

Assuming the 90 days horizon Cayson Acquisition is expected to generate 431.29 times less return on investment than CompoSecure. But when comparing it to its historical volatility, Cayson Acquisition Corp is 2.26 times less risky than CompoSecure. It trades about 0.0 of its potential returns per unit of risk. CompoSecure is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  344.00  in CompoSecure on April 20, 2025 and sell it today you would earn a total of  357.00  from holding CompoSecure or generate 103.78% return on investment over 90 days.

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

Cayson Acquisition Corp  vs.  CompoSecure

Cayson Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cayson Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cayson Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CompoSecure

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 28 (%) 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.

Pair Trading with Cayson Acquisition and CompoSecure

The main advantage of trading using opposite Cayson Acquisition and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cayson Acquisition 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 Cayson Acquisition 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.