Correlation Between Secom Co and MSA Safety
Can any of the company-specific risk be diversified away by investing in both Secom Co and MSA Safety 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 Secom Co and MSA Safety into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Secom Co Ltd and MSA Safety, you can compare the effects of market volatilities on Secom Co and MSA Safety 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 Secom Co with a short position of MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secom Co and MSA Safety.
Diversification Opportunities for Secom Co and MSA Safety
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Secom and MSA is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Secom Co Ltd and MSA Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety and Secom Co 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 Secom Co Ltd are associated (or correlated) with MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of Secom Co i.e., Secom Co and MSA Safety go up and down completely randomly.
Pair Corralation between Secom Co and MSA Safety
Assuming the 90 days horizon Secom Co is expected to generate 2.12 times less return on investment than MSA Safety. In addition to that, Secom Co is 1.07 times more volatile than MSA Safety. It trades about 0.02 of its total potential returns per unit of risk. MSA Safety is currently generating about 0.04 per unit of volatility. If you would invest 14,553 in MSA Safety on August 31, 2024 and sell it today you would earn a total of 2,828 from holding MSA Safety or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Secom Co Ltd vs. MSA Safety
Performance |
| Timeline |
| Secom Co |
| MSA Safety |
Secom Co and MSA Safety Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secom Co and MSA Safety
The main advantage of trading using opposite Secom Co and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secom Co position performs unexpectedly, MSA Safety 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 MSA Safety will offset losses from the drop in MSA Safety's long position.| Secom Co vs. Allegion PLC | Secom Co vs. MSA Safety | Secom Co vs. HUMANA INC | Secom Co vs. Aquagold International |
| MSA Safety vs. Allegion PLC | MSA Safety vs. Resideo Technologies | MSA Safety vs. NL Industries | MSA Safety vs. Brady |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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