Correlation Between ASSA ABLOY and Supercom

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

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

Diversification Opportunities for ASSA ABLOY and Supercom

-0.13

Correlation Coefficient

ASSA ABLOY  Supercom

Good diversification

The 3 months correlation between ASSA and Supercom is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Supercom go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Supercom

Assuming the 90 days horizon ASSA ABLOY is expected to generate 73.0 times less return on investment than Supercom. But when comparing it to its historical volatility, ASSA ABLOY AB is 32.06 times less risky than Supercom. It trades about 0.19 of its potential returns per unit of risk. Supercom is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  344.00  in Supercom on October 24, 2024 and sell it today you would earn a total of  980.00  from holding Supercom or generate 284.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

ASSA ABLOY AB  vs.  Supercom

ASSA ABLOY AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Supercom

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Supercom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASSA ABLOY and Supercom

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

The idea behind ASSA ABLOY AB and Supercom 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.