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 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
Average diversification
The 3 months correlation between SECOM and Securitas is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SECOM 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 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 LTD is expected to generate 1.68 times more return on investment than Securitas. However, SECOM CO is 1.68 times more volatile than Securitas AB. It trades about -0.07 of its potential returns per unit of risk. Securitas AB is currently generating about -0.3 per unit of risk. If you would invest 3,240 in SECOM LTD on October 16, 2024 and sell it today you would lose (60.00) from holding SECOM LTD or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SECOM LTD vs. Securitas AB
Performance |
| Timeline |
| SECOM LTD |
| 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. Shenandoah Telecommunications | SECOM CO vs. Coor Service Management | SECOM CO vs. GEELY AUTOMOBILE | SECOM CO vs. TELECOM ITALRISP ADR10 |
| Securitas vs. ASSA ABLOY AB | Securitas vs. Halma plc | Securitas vs. Allegion plc | Securitas vs. Superior Plus Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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