Correlation Between Securitas and Cyber Security
Can any of the company-specific risk be diversified away by investing in both Securitas and Cyber Security 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 Cyber Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Securitas AB and Cyber Security 1, you can compare the effects of market volatilities on Securitas and Cyber Security 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 Cyber Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Securitas and Cyber Security.
Diversification Opportunities for Securitas and Cyber Security
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Securitas and Cyber is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Cyber Security 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyber Security 1 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 Cyber Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyber Security 1 has no effect on the direction of Securitas i.e., Securitas and Cyber Security go up and down completely randomly.
Pair Corralation between Securitas and Cyber Security
Assuming the 90 days trading horizon Securitas AB is expected to under-perform the Cyber Security. But the stock apears to be less risky and, when comparing its historical volatility, Securitas AB is 19.55 times less risky than Cyber Security. The stock trades about -0.46 of its potential returns per unit of risk. The Cyber Security 1 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.74 in Cyber Security 1 on October 12, 2024 and sell it today you would earn a total of 0.14 from holding Cyber Security 1 or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Securitas AB vs. Cyber Security 1
Performance |
| Timeline |
| Securitas AB |
| Cyber Security 1 |
Securitas and Cyber Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Securitas and Cyber Security
The main advantage of trading using opposite Securitas and Cyber Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Securitas position performs unexpectedly, Cyber Security 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 Cyber Security will offset losses from the drop in Cyber Security's long position.The idea behind Securitas AB and Cyber Security 1 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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