Correlation Between SECURITAS and Paragon GmbH

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

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

Diversification Opportunities for SECURITAS and Paragon GmbH

-0.42

Correlation Coefficient

SECURITAS  Paragon GmbH

Very good diversification

The 3 months correlation between SECURITAS and Paragon is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and paragon GmbH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on paragon GmbH 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 Paragon GmbH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of paragon GmbH has no effect on the direction of SECURITAS i.e., SECURITAS and Paragon GmbH go up and down completely randomly.

Pair Corralation between SECURITAS and Paragon GmbH

Assuming the 90 days trading horizon SECURITAS B is expected to generate 0.65 times more return on investment than Paragon GmbH. However, SECURITAS B is 1.55 times less risky than Paragon GmbH. It trades about 0.22 of its potential returns per unit of risk. paragon GmbH Co is currently generating about 0.02 per unit of risk. If you would invest  910.00  in SECURITAS B on October 6, 2024 and sell it today you would earn a total of  284.00  from holding SECURITAS B or generate 31.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

SECURITAS B   vs.  paragon GmbH Co

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

paragon GmbH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days paragon GmbH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with SECURITAS and Paragon GmbH

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

The idea behind SECURITAS B and paragon GmbH 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.