Correlation Between Zhongsheng Group and SECURITAS

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

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

Diversification Opportunities for Zhongsheng Group and SECURITAS

0.71

Correlation Coefficient

Zhongsheng Group  SECURITAS

Poor diversification

The 3 months correlation between Zhongsheng and SECURITAS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and SECURITAS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURITAS B and Zhongsheng Group 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 Zhongsheng Group Holdings 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 B has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and SECURITAS go up and down completely randomly.

Pair Corralation between Zhongsheng Group and SECURITAS

Assuming the 90 days horizon Zhongsheng Group is expected to generate 1.56 times less return on investment than SECURITAS. In addition to that, Zhongsheng Group is 1.79 times more volatile than SECURITAS B . It trades about 0.08 of its total potential returns per unit of risk. SECURITAS B is currently generating about 0.21 per unit of volatility. If you would invest  915.00  in SECURITAS B on October 7, 2024 and sell it today you would earn a total of  279.00  from holding SECURITAS B or generate 30.49% return on investment over 90 days.

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

Zhongsheng Group Holdings  vs.  SECURITAS B

Zhongsheng Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhongsheng Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zhongsheng Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SECURITAS B

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECURITAS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongsheng Group and SECURITAS

The main advantage of trading using opposite Zhongsheng Group and SECURITAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongsheng Group 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's long position.

The idea behind Zhongsheng Group Holdings and SECURITAS B 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.