Correlation Between SECURITAS and NEXON Co

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

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

Diversification Opportunities for SECURITAS and NEXON Co

0.21

Correlation Coefficient

SECURITAS  NEXON Co

Modest diversification

The 3 months correlation between SECURITAS and NEXON is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON Co 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 NEXON Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON Co has no effect on the direction of SECURITAS i.e., SECURITAS and NEXON Co go up and down completely randomly.

Pair Corralation between SECURITAS and NEXON Co

Assuming the 90 days trading horizon SECURITAS B is expected to under-perform the NEXON Co. But the stock apears to be less risky and, when comparing its historical volatility, SECURITAS B is 41.56 times less risky than NEXON Co. The stock trades about -0.05 of its potential returns per unit of risk. The NEXON Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  641.00  in NEXON Co on October 22, 2024 and sell it today you would earn a total of  669.00  from holding NEXON Co or generate 104.37% return on investment over 90 days.

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

SECURITAS B   vs.  NEXON Co

SECURITAS B

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SECURITAS unveiled solid returns over the last few months and may actually be approaching a breakup point.

NEXON Co

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NEXON Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, NEXON Co unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SECURITAS and NEXON Co

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

The idea behind SECURITAS B and NEXON Co 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.