Correlation Between SECURITAS and TOTAL GABON

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

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

Diversification Opportunities for SECURITAS and TOTAL GABON

0.43

Correlation Coefficient

SECURITAS  TOTAL GABON

Very weak diversification

The 3 months correlation between SECURITAS and TOTAL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON 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 TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of SECURITAS i.e., SECURITAS and TOTAL GABON go up and down completely randomly.

Pair Corralation between SECURITAS and TOTAL GABON

Assuming the 90 days trading horizon SECURITAS B is expected to generate 1.11 times more return on investment than TOTAL GABON. However, SECURITAS is 1.11 times more volatile than TOTAL GABON. It trades about 0.17 of its potential returns per unit of risk. TOTAL GABON is currently generating about 0.11 per unit of risk. If you would invest  886.00  in SECURITAS B on September 3, 2024 and sell it today you would earn a total of  296.00  from holding SECURITAS B or generate 33.41% return on investment over 90 days.

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

SECURITAS B   vs.  TOTAL GABON

SECURITAS B

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 13 (%) 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.

TOTAL GABON

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with SECURITAS and TOTAL GABON

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

The idea behind SECURITAS B and TOTAL GABON 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.