Correlation Between Eastern and CompX International

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

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

Diversification Opportunities for Eastern and CompX International

0.19

Correlation Coefficient

Eastern  CompX International

Average diversification

The 3 months correlation between Eastern and CompX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International and Eastern 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 Eastern Co are associated (or correlated) with CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Eastern i.e., Eastern and CompX International go up and down completely randomly.

Pair Corralation between Eastern and CompX International

Considering the 90-day investment horizon Eastern is expected to generate 56.0 times less return on investment than CompX International. But when comparing it to its historical volatility, Eastern Co is 1.84 times less risky than CompX International. It trades about 0.0 of its potential returns per unit of risk. CompX International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,537  in CompX International on May 15, 2025 and sell it today you would earn a total of  569.00  from holding CompX International or generate 22.43% return on investment over 90 days.

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

Eastern Co  vs.  CompX International

Eastern

Risk-Adjusted Performance

Weakest

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

CompX International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in CompX International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, CompX International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern and CompX International

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

The idea behind Eastern Co and CompX International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.