Correlation Between Dedicare and SECITS Holding
Can any of the company-specific risk be diversified away by investing in both Dedicare and SECITS Holding 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 Dedicare and SECITS Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dedicare AB and SECITS Holding AB, you can compare the effects of market volatilities on Dedicare and SECITS Holding 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 Dedicare with a short position of SECITS Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dedicare and SECITS Holding.
Diversification Opportunities for Dedicare and SECITS Holding
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dedicare and SECITS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dedicare AB and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS Holding AB and Dedicare 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 Dedicare AB are associated (or correlated) with SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of Dedicare i.e., Dedicare and SECITS Holding go up and down completely randomly.
Pair Corralation between Dedicare and SECITS Holding
Assuming the 90 days trading horizon Dedicare AB is expected to under-perform the SECITS Holding. But the stock apears to be less risky and, when comparing its historical volatility, Dedicare AB is 7.36 times less risky than SECITS Holding. The stock trades about -0.08 of its potential returns per unit of risk. The SECITS Holding AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.00 in SECITS Holding AB on September 1, 2024 and sell it today you would earn a total of 0.04 from holding SECITS Holding AB or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dedicare AB vs. SECITS Holding AB
Performance |
| Timeline |
| Dedicare AB |
| SECITS Holding AB |
Dedicare and SECITS Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dedicare and SECITS Holding
The main advantage of trading using opposite Dedicare and SECITS Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dedicare position performs unexpectedly, SECITS Holding 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 SECITS Holding will offset losses from the drop in SECITS Holding's long position.The idea behind Dedicare AB and SECITS Holding 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.| SECITS Holding vs. DevPort AB | SECITS Holding vs. B3 Consulting Group | SECITS Holding vs. Micro Systemation AB |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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