Correlation Between SECURE ELECTRONIC and CHAMPION BREWERIES

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

By analyzing existing cross correlation between SECURE ELECTRONIC TECHNOLOGY and CHAMPION BREWERIES PLC, you can compare the effects of market volatilities on SECURE ELECTRONIC and CHAMPION BREWERIES 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 SECURE ELECTRONIC with a short position of CHAMPION BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SECURE ELECTRONIC and CHAMPION BREWERIES.

Diversification Opportunities for SECURE ELECTRONIC and CHAMPION BREWERIES

0.31

Correlation Coefficient

SECURE ELECTRONIC  CHAMPION BREWERIES

Weak diversification

The 3 months correlation between SECURE and CHAMPION is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SECURE ELECTRONIC TECHNOLOGY and CHAMPION BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAMPION BREWERIES PLC and SECURE ELECTRONIC 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 SECURE ELECTRONIC TECHNOLOGY are associated (or correlated) with CHAMPION BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAMPION BREWERIES PLC has no effect on the direction of SECURE ELECTRONIC i.e., SECURE ELECTRONIC and CHAMPION BREWERIES go up and down completely randomly.

Pair Corralation between SECURE ELECTRONIC and CHAMPION BREWERIES

Assuming the 90 days trading horizon SECURE ELECTRONIC TECHNOLOGY is expected to under-perform the CHAMPION BREWERIES. But the stock apears to be less risky and, when comparing its historical volatility, SECURE ELECTRONIC TECHNOLOGY is 1.1 times less risky than CHAMPION BREWERIES. The stock trades about -0.09 of its potential returns per unit of risk. The CHAMPION BREWERIES PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  370.00  in CHAMPION BREWERIES PLC on December 5, 2024 and sell it today you would earn a total of  20.00  from holding CHAMPION BREWERIES PLC or generate 5.41% return on investment over 90 days.

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

SECURE ELECTRONIC TECHNOLOGY  vs.  CHAMPION BREWERIES PLC

SECURE ELECTRONIC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SECURE ELECTRONIC TECHNOLOGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, SECURE ELECTRONIC is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

CHAMPION BREWERIES PLC

Risk-Adjusted Performance

Weak

Over the last 90 days CHAMPION BREWERIES PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CHAMPION BREWERIES is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SECURE ELECTRONIC and CHAMPION BREWERIES

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

The idea behind SECURE ELECTRONIC TECHNOLOGY and CHAMPION BREWERIES PLC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.