Correlation Between Securitas and Brinks

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

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

Diversification Opportunities for Securitas and Brinks

0.73

Correlation Coefficient

Securitas  Brinks

Poor diversification

The 3 months correlation between Securitas and Brinks is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of Securitas i.e., Securitas and Brinks go up and down completely randomly.

Pair Corralation between Securitas and Brinks

Assuming the 90 days horizon Securitas AB is expected to under-perform the Brinks. But the pink sheet apears to be less risky and, when comparing its historical volatility, Securitas AB is 7.93 times less risky than Brinks. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Brinks Company is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  7,993  in Brinks Company on January 25, 2024 and sell it today you would earn a total of  944.00  from holding Brinks Company or generate 11.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Securitas AB  vs.  Brinks Company

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 weak fundamental drivers, Securitas may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Brinks Company

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Securitas and Brinks

The main advantage of trading using opposite Securitas and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Securitas position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.

The idea behind Securitas AB and Brinks Company 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.