Correlation Between Micro Systemation and SECITS Holding

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

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

Diversification Opportunities for Micro Systemation and SECITS Holding

-0.06

Correlation Coefficient

Micro Systemation  SECITS Holding

Good diversification

The 3 months correlation between Micro and SECITS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Micro Systemation AB and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS Holding AB and Micro Systemation 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 Micro Systemation AB are associated (or correlated) with SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of Micro Systemation i.e., Micro Systemation and SECITS Holding go up and down completely randomly.

Pair Corralation between Micro Systemation and SECITS Holding

Assuming the 90 days trading horizon Micro Systemation is expected to generate 1.47 times less return on investment than SECITS Holding. But when comparing it to its historical volatility, Micro Systemation AB is 4.58 times less risky than SECITS Holding. It trades about 0.1 of its potential returns per unit of risk. SECITS Holding AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3.02  in SECITS Holding AB on December 31, 2024 and sell it today you would lose (0.32) from holding SECITS Holding AB or give up 10.6% of portfolio value over 90 days.

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

Micro Systemation AB  vs.  SECITS Holding AB

Micro Systemation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Systemation AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Micro Systemation sustained solid returns over the last few months and may actually be approaching a breakup point.

SECITS Holding AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SECITS Holding AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECITS Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micro Systemation and SECITS Holding

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

The idea behind Micro Systemation AB and SECITS Holding 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.