Correlation Between Securitas and Copa Holdings

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

By analyzing existing cross correlation between Securitas AB and Copa Holdings SA, you can compare the effects of market volatilities on Securitas and Copa Holdings 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 Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Securitas and Copa Holdings.

Diversification Opportunities for Securitas and Copa Holdings

0.36

Correlation Coefficient

Securitas  Copa Holdings

Weak diversification

The 3 months correlation between Securitas and Copa is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA 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 AB are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Securitas i.e., Securitas and Copa Holdings go up and down completely randomly.

Pair Corralation between Securitas and Copa Holdings

Assuming the 90 days horizon Securitas AB is expected to generate 2.46 times more return on investment than Copa Holdings. However, Securitas is 2.46 times more volatile than Copa Holdings SA. It trades about 0.21 of its potential returns per unit of risk. Copa Holdings SA is currently generating about 0.05 per unit of risk. If you would invest  1,199  in Securitas AB on December 2, 2024 and sell it today you would earn a total of  230.00  from holding Securitas AB or generate 19.18% return on investment over 90 days.

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

Securitas AB  vs.  Copa Holdings SA

Securitas AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Securitas AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Securitas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Copa Holdings SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Copa Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Securitas and Copa Holdings

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

The idea behind Securitas AB and Copa Holdings SA 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.