Correlation Between SECURITAS and MASI AGRICOLA

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

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

Diversification Opportunities for SECURITAS and MASI AGRICOLA

-0.51

Correlation Coefficient

SECURITAS  MASI AGRICOLA

Excellent diversification

The 3 months correlation between SECURITAS and MASI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and MASI AGRICOLA SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASI AGRICOLA SPA 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 MASI AGRICOLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASI AGRICOLA SPA has no effect on the direction of SECURITAS i.e., SECURITAS and MASI AGRICOLA go up and down completely randomly.

Pair Corralation between SECURITAS and MASI AGRICOLA

Assuming the 90 days trading horizon SECURITAS B is expected to generate 1.31 times more return on investment than MASI AGRICOLA. However, SECURITAS is 1.31 times more volatile than MASI AGRICOLA SPA. It trades about 0.16 of its potential returns per unit of risk. MASI AGRICOLA SPA is currently generating about -0.02 per unit of risk. If you would invest  786.00  in SECURITAS B on October 4, 2024 and sell it today you would earn a total of  417.00  from holding SECURITAS B or generate 53.05% return on investment over 90 days.

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

SECURITAS B   vs.  MASI AGRICOLA SPA

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 fragile basic indicators, SECURITAS unveiled solid returns over the last few months and may actually be approaching a breakup point.

MASI AGRICOLA SPA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SECURITAS and MASI AGRICOLA

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

The idea behind SECURITAS B and MASI AGRICOLA SPA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.