Correlation Between SECITS Holding and Image Systems

Can any of the company-specific risk be diversified away by investing in both SECITS Holding and Image Systems 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 Image Systems 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 Image Systems AB, you can compare the effects of market volatilities on SECITS Holding and Image Systems 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 Image Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of SECITS Holding and Image Systems.

Diversification Opportunities for SECITS Holding and Image Systems

0.29

Correlation Coefficient

SECITS Holding  Image Systems

Modest diversification

The 3 months correlation between SECITS and Image is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SECITS Holding AB and Image Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Systems 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 Image Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Systems AB has no effect on the direction of SECITS Holding i.e., SECITS Holding and Image Systems go up and down completely randomly.

Pair Corralation between SECITS Holding and Image Systems

Assuming the 90 days trading horizon SECITS Holding AB is expected to generate 1.55 times more return on investment than Image Systems. However, SECITS Holding is 1.55 times more volatile than Image Systems AB. It trades about 0.03 of its potential returns per unit of risk. Image Systems AB is currently generating about 0.0 per unit of risk. If you would invest  3.00  in SECITS Holding AB on December 29, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

SECITS Holding AB  vs.  Image Systems 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.

Image Systems AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Image Systems AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Image Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SECITS Holding and Image Systems

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

The idea behind SECITS Holding AB and Image Systems 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..