Correlation Between SECURITAS and Fair Isaac

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

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

Diversification Opportunities for SECURITAS and Fair Isaac

0.48

Correlation Coefficient

SECURITAS  Fair Isaac

Very weak diversification

The 3 months correlation between SECURITAS and Fair is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and Fair Isaac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac has no effect on the direction of SECURITAS i.e., SECURITAS and Fair Isaac go up and down completely randomly.

Pair Corralation between SECURITAS and Fair Isaac

Assuming the 90 days trading horizon SECURITAS B is expected to generate 0.24 times more return on investment than Fair Isaac. However, SECURITAS B is 4.12 times less risky than Fair Isaac. It trades about -0.05 of its potential returns per unit of risk. Fair Isaac is currently generating about -0.2 per unit of risk. If you would invest  1,190  in SECURITAS B on October 22, 2024 and sell it today you would lose (7.00) from holding SECURITAS B or give up 0.59% of portfolio value over 90 days.

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

SECURITAS B   vs.  Fair Isaac

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.

Fair Isaac

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SECURITAS and Fair Isaac

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

The idea behind SECURITAS B and Fair Isaac 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.