Correlation Between Apple and SECURITAS

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

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

Diversification Opportunities for Apple and SECURITAS

0.85

Correlation Coefficient

Apple  SECURITAS

Very poor diversification

The 3 months correlation between Apple and SECURITAS is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SECURITAS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURITAS B and Apple 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 Apple Inc 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 Apple i.e., Apple and SECURITAS go up and down completely randomly.

Pair Corralation between Apple and SECURITAS

Assuming the 90 days trading horizon Apple is expected to generate 2.03 times less return on investment than SECURITAS. But when comparing it to its historical volatility, Apple Inc is 1.92 times less risky than SECURITAS. It trades about 0.17 of its potential returns per unit of risk. SECURITAS B is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  899.00  in SECURITAS B on September 12, 2024 and sell it today you would earn a total of  316.00  from holding SECURITAS B or generate 35.15% return on investment over 90 days.

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

Apple Inc  vs.  SECURITAS B

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

SECURITAS B

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 14 (%) 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 Apple and SECURITAS

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

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.