Correlation Between Securitas and Securitas

Can any of the company-specific risk be diversified away by investing in both Securitas 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 Securitas and Securitas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Securitas AB and Securitas AB, you can compare the effects of market volatilities on Securitas 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 Securitas with a short position of Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Securitas and Securitas.

Diversification Opportunities for Securitas and Securitas

0.8

Correlation Coefficient

Securitas  Securitas

Very poor diversification

The 3 months correlation between Securitas and Securitas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB 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 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 Securitas i.e., Securitas and Securitas go up and down completely randomly.

Pair Corralation between Securitas and Securitas

Assuming the 90 days horizon Securitas AB is expected to under-perform the Securitas. In addition to that, Securitas is 6.32 times more volatile than Securitas AB. It trades about -0.41 of its total potential returns per unit of risk. Securitas AB is currently generating about -0.27 per unit of volatility. If you would invest  1,043  in Securitas AB on January 23, 2024 and sell it today you would lose (12.00) from holding Securitas AB or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Securitas AB  vs.  Securitas AB

Securitas AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Securitas AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Securitas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Securitas AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Securitas AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Securitas may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Securitas and Securitas

The main advantage of trading using opposite Securitas and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Securitas 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.

The idea behind Securitas AB and Securitas AB 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.