Correlation Between SECITS Holding and Garo AB

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

By analyzing existing cross correlation between SECITS Holding AB and Garo AB, you can compare the effects of market volatilities on SECITS Holding and Garo AB 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 SECITS Holding with a short position of Garo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SECITS Holding and Garo AB.

Diversification Opportunities for SECITS Holding and Garo AB

0.57

Correlation Coefficient

SECITS Holding  Garo AB

Very weak diversification

The 3 months correlation between SECITS and Garo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding SECITS Holding AB and Garo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garo AB and SECITS Holding 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 SECITS Holding AB are associated (or correlated) with Garo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garo AB has no effect on the direction of SECITS Holding i.e., SECITS Holding and Garo AB go up and down completely randomly.

Pair Corralation between SECITS Holding and Garo AB

Assuming the 90 days trading horizon SECITS Holding AB is expected to generate 4.13 times more return on investment than Garo AB. However, SECITS Holding is 4.13 times more volatile than Garo AB. It trades about 0.03 of its potential returns per unit of risk. Garo AB is currently generating about -0.08 per unit of risk. If you would invest  3.00  in SECITS Holding AB on December 30, 2024 and sell it today you would lose (0.30) from holding SECITS Holding AB or give up 10.0% of portfolio value over 90 days.

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

SECITS Holding AB  vs.  Garo AB

SECITS Holding AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SECITS Holding AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECITS Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Garo AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garo AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SECITS Holding and Garo AB

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

The idea behind SECITS Holding AB and Garo AB 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.