Correlation Between Dalata Hotel and Securitas

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

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

Diversification Opportunities for Dalata Hotel and Securitas

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Correlation Coefficient

Dalata Hotel  Securitas

Pay attention - limited upside

The 3 months correlation between Dalata and Securitas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB and Dalata Hotel 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 Dalata Hotel Group 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 Dalata Hotel i.e., Dalata Hotel and Securitas go up and down completely randomly.

Pair Corralation between Dalata Hotel and Securitas

Assuming the 90 days horizon Dalata Hotel is expected to generate 41.08 times less return on investment than Securitas. But when comparing it to its historical volatility, Dalata Hotel Group is 22.26 times less risky than Securitas. It trades about 0.08 of its potential returns per unit of risk. Securitas AB is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  975.00  in Securitas AB on September 24, 2024 and sell it today you would earn a total of  310.00  from holding Securitas AB or generate 31.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	84.94%
Values	Daily Returns

Dalata Hotel Group  vs.  Securitas AB

Dalata Hotel Group

Risk-Adjusted Performance

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Very Weak

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

Securitas AB

Risk-Adjusted Performance

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Good

Over the last 90 days Securitas AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile fundamental drivers, Securitas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalata Hotel and Securitas

The main advantage of trading using opposite Dalata Hotel and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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 Dalata Hotel Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..