Correlation Between Cyxone AB and Securitas
Can any of the company-specific risk be diversified away by investing in both Cyxone AB and Securitas 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 Cyxone AB and Securitas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cyxone AB and Securitas AB, you can compare the effects of market volatilities on Cyxone AB and Securitas 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 Cyxone AB with a short position of Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyxone AB and Securitas.
Diversification Opportunities for Cyxone AB and Securitas
Excellent diversification
The 3 months correlation between Cyxone and Securitas is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cyxone AB and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB and Cyxone AB 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 Cyxone AB are associated (or correlated) with Securitas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Securitas AB has no effect on the direction of Cyxone AB i.e., Cyxone AB and Securitas go up and down completely randomly.
Pair Corralation between Cyxone AB and Securitas
Assuming the 90 days trading horizon Cyxone AB is expected to generate 9.05 times more return on investment than Securitas. However, Cyxone AB is 9.05 times more volatile than Securitas AB. It trades about 0.01 of its potential returns per unit of risk. Securitas AB is currently generating about 0.11 per unit of risk. If you would invest 3.90 in Cyxone AB on August 29, 2024 and sell it today you would lose (1.35) from holding Cyxone AB or give up 34.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cyxone AB vs. Securitas AB
Performance |
| Timeline |
| Cyxone AB |
| Securitas AB |
Cyxone AB and Securitas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cyxone AB and Securitas
The main advantage of trading using opposite Cyxone AB and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cyxone AB position performs unexpectedly, Securitas 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 Securitas will offset losses from the drop in Securitas' long position.The idea behind Cyxone AB and Securitas AB 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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