Correlation Between SECURITAS and Wynn Macau

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Can any of the company-specific risk be diversified away by investing in both SECURITAS and Wynn Macau 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 Wynn Macau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SECURITAS B and Wynn Macau Limited, you can compare the effects of market volatilities on SECURITAS and Wynn Macau 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 Wynn Macau. Check out your portfolio center. Please also check ongoing floating volatility patterns of SECURITAS and Wynn Macau.

Diversification Opportunities for SECURITAS and Wynn Macau

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between SECURITAS and Wynn is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and Wynn Macau Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Macau Limited 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 Wynn Macau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Macau Limited has no effect on the direction of SECURITAS i.e., SECURITAS and Wynn Macau go up and down completely randomly.

Pair Corralation between SECURITAS and Wynn Macau

Assuming the 90 days trading horizon SECURITAS B is expected to generate 0.22 times more return on investment than Wynn Macau. However, SECURITAS B is 4.47 times less risky than Wynn Macau. It trades about -0.23 of its potential returns per unit of risk. Wynn Macau Limited is currently generating about -0.13 per unit of risk. If you would invest  1,219  in SECURITAS B on October 8, 2024 and sell it today you would lose (25.00) from holding SECURITAS B or give up 2.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SECURITAS B   vs.  Wynn Macau Limited

 Performance 
       Timeline  
SECURITAS B 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
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.
Wynn Macau Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wynn Macau Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SECURITAS and Wynn Macau Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SECURITAS and Wynn Macau

The main advantage of trading using opposite SECURITAS and Wynn Macau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SECURITAS position performs unexpectedly, Wynn Macau 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 Wynn Macau will offset losses from the drop in Wynn Macau's long position.
The idea behind SECURITAS B and Wynn Macau Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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