Correlation Between SECITS Holding and Micro Systemation

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

Diversification Opportunities for SECITS Holding and Micro Systemation

-0.06

Correlation Coefficient

SECITS Holding  Micro Systemation

Good diversification

The 3 months correlation between SECITS and Micro is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SECITS Holding AB and Micro Systemation AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Systemation 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 Micro Systemation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Systemation has no effect on the direction of SECITS Holding i.e., SECITS Holding and Micro Systemation go up and down completely randomly.

Pair Corralation between SECITS Holding and Micro Systemation

Assuming the 90 days trading horizon SECITS Holding AB is expected to generate 4.58 times more return on investment than Micro Systemation. However, SECITS Holding is 4.58 times more volatile than Micro Systemation AB. It trades about 0.03 of its potential returns per unit of risk. Micro Systemation AB is currently generating about 0.1 per unit of risk. If you would invest  3.02  in SECITS Holding AB on December 31, 2024 and sell it today you would lose (0.32) from holding SECITS Holding AB or give up 10.6% of portfolio value over 90 days.

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

SECITS Holding AB  vs.  Micro Systemation 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.

Micro Systemation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Systemation AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Micro Systemation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SECITS Holding and Micro Systemation

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

The idea behind SECITS Holding AB and Micro Systemation 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 CEOs Directory module to screen CEOs from public companies around the world.