Correlation Between Secom Co and Securitas
Can any of the company-specific risk be diversified away by investing in both Secom Co 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 Secom Co and Securitas 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 Securitas AB, you can compare the effects of market volatilities on Secom Co 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 Secom Co with a short position of Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secom Co and Securitas.
Diversification Opportunities for Secom Co and Securitas
Excellent diversification
The 3 months correlation between Secom and Securitas is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Secom Co Ltd and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB 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 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 Secom Co i.e., Secom Co and Securitas go up and down completely randomly.
Pair Corralation between Secom Co and Securitas
Assuming the 90 days horizon Secom Co is expected to generate 5.64 times less return on investment than Securitas. But when comparing it to its historical volatility, Secom Co Ltd is 1.04 times less risky than Securitas. It trades about 0.02 of its potential returns per unit of risk. Securitas AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,167 in Securitas AB on August 31, 2024 and sell it today you would earn a total of 5,628 from holding Securitas AB or generate 68.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Secom Co Ltd vs. Securitas AB
Performance |
| Timeline |
| Secom Co |
| Securitas AB |
Secom Co and Securitas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secom Co and Securitas
The main advantage of trading using opposite Secom Co and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secom Co 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.| Secom Co vs. Allegion PLC | Secom Co vs. MSA Safety | Secom Co vs. HUMANA INC | Secom Co vs. Aquagold International |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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