Correlation Between SECURITAS and ELEMENT NUTRSCIENCES

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

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

Diversification Opportunities for SECURITAS and ELEMENT NUTRSCIENCES

0.34

Correlation Coefficient

SECURITAS  ELEMENT NUTRSCIENCES

Weak diversification

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

Pair Corralation between SECURITAS and ELEMENT NUTRSCIENCES

Assuming the 90 days trading horizon SECURITAS is expected to generate 8.33 times less return on investment than ELEMENT NUTRSCIENCES. But when comparing it to its historical volatility, SECURITAS B is 8.17 times less risky than ELEMENT NUTRSCIENCES. It trades about 0.13 of its potential returns per unit of risk. ELEMENT NUTRSCIENCES is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.60  in ELEMENT NUTRSCIENCES on October 23, 2024 and sell it today you would earn a total of  1.65  from holding ELEMENT NUTRSCIENCES or generate 63.46% 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.  ELEMENT NUTRSCIENCES

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.

ELEMENT NUTRSCIENCES

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ELEMENT NUTRSCIENCES are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ELEMENT NUTRSCIENCES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SECURITAS and ELEMENT NUTRSCIENCES

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

The idea behind SECURITAS B and ELEMENT NUTRSCIENCES 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .