Correlation Between SECURE ELECTRONIC and CONOIL PLC

Can any of the company-specific risk be diversified away by investing in both SECURE ELECTRONIC and CONOIL PLC 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 CONOIL PLC 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 CONOIL PLC, you can compare the effects of market volatilities on SECURE ELECTRONIC and CONOIL PLC 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 CONOIL PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SECURE ELECTRONIC and CONOIL PLC.

Diversification Opportunities for SECURE ELECTRONIC and CONOIL PLC

-0.4

Correlation Coefficient

SECURE ELECTRONIC  CONOIL PLC

Very good diversification

The 3 months correlation between SECURE and CONOIL is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SECURE ELECTRONIC TECHNOLOGY and CONOIL PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONOIL 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 CONOIL PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONOIL PLC has no effect on the direction of SECURE ELECTRONIC i.e., SECURE ELECTRONIC and CONOIL PLC go up and down completely randomly.

Pair Corralation between SECURE ELECTRONIC and CONOIL PLC

Assuming the 90 days trading horizon SECURE ELECTRONIC TECHNOLOGY is expected to under-perform the CONOIL PLC. In addition to that, SECURE ELECTRONIC is 1.42 times more volatile than CONOIL PLC. It trades about -0.06 of its total potential returns per unit of risk. CONOIL PLC is currently generating about 0.41 per unit of volatility. If you would invest  16,800  in CONOIL PLC on September 15, 2024 and sell it today you would earn a total of  21,920  from holding CONOIL PLC or generate 130.48% return on investment over 90 days.

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

SECURE ELECTRONIC TECHNOLOGY  vs.  CONOIL PLC

SECURE ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SECURE ELECTRONIC TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CONOIL PLC

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CONOIL PLC are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent forward indicators, CONOIL PLC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SECURE ELECTRONIC and CONOIL PLC

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

The idea behind SECURE ELECTRONIC TECHNOLOGY and CONOIL 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.