Correlation Between Securitas and DATANG INTL
Can any of the company-specific risk be diversified away by investing in both Securitas and DATANG INTL 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 Securitas and DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Securitas AB and DATANG INTL POW, you can compare the effects of market volatilities on Securitas and DATANG INTL 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 Securitas with a short position of DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Securitas and DATANG INTL.
Diversification Opportunities for Securitas and DATANG INTL
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Securitas and DATANG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and Securitas 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 Securitas AB are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of Securitas i.e., Securitas and DATANG INTL go up and down completely randomly.
Pair Corralation between Securitas and DATANG INTL
Assuming the 90 days trading horizon Securitas AB is expected to under-perform the DATANG INTL. But the stock apears to be less risky and, when comparing its historical volatility, Securitas AB is 3.77 times less risky than DATANG INTL. The stock trades about -0.03 of its potential returns per unit of risk. The DATANG INTL POW is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17.00 in DATANG INTL POW on October 30, 2024 and sell it today you would earn a total of 0.00 from holding DATANG INTL POW or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Securitas AB vs. DATANG INTL POW
Performance |
| Timeline |
| Securitas AB |
| DATANG INTL POW |
Securitas and DATANG INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Securitas and DATANG INTL
The main advantage of trading using opposite Securitas and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Securitas position performs unexpectedly, DATANG INTL 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 DATANG INTL will offset losses from the drop in DATANG INTL's long position.| Securitas vs. CompuGroup Medical SE | Securitas vs. Diamyd Medical AB | Securitas vs. Air Lease | Securitas vs. IMAGIN MEDICAL INC |
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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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