Correlation Between SECURITAS and Blackline

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

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

Diversification Opportunities for SECURITAS and Blackline

0.87

Correlation Coefficient

SECURITAS  Blackline

Very poor diversification

The 3 months correlation between SECURITAS and Blackline is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline and SECURITAS 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 SECURITAS B are associated (or correlated) with Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of SECURITAS i.e., SECURITAS and Blackline go up and down completely randomly.

Pair Corralation between SECURITAS and Blackline

Assuming the 90 days trading horizon SECURITAS B is expected to under-perform the Blackline. But the stock apears to be less risky and, when comparing its historical volatility, SECURITAS B is 2.86 times less risky than Blackline. The stock trades about -0.22 of its potential returns per unit of risk. The Blackline is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  6,050  in Blackline on October 7, 2024 and sell it today you would lose (100.00) from holding Blackline or give up 1.65% of portfolio value over 90 days.

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

SECURITAS B   vs.  Blackline

SECURITAS B

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECURITAS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Blackline

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blackline reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SECURITAS and Blackline

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

The idea behind SECURITAS B and Blackline 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.