Correlation Between Securitas and Byggmax Group

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

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

Diversification Opportunities for Securitas and Byggmax Group

0.39

Correlation Coefficient

Securitas  Byggmax Group

Weak diversification

The 3 months correlation between Securitas and Byggmax is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Byggmax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggmax Group AB 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 Byggmax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggmax Group AB has no effect on the direction of Securitas i.e., Securitas and Byggmax Group go up and down completely randomly.

Pair Corralation between Securitas and Byggmax Group

Assuming the 90 days trading horizon Securitas AB is expected to generate 0.62 times more return on investment than Byggmax Group. However, Securitas AB is 1.61 times less risky than Byggmax Group. It trades about 0.15 of its potential returns per unit of risk. Byggmax Group AB is currently generating about 0.08 per unit of risk. If you would invest  11,756  in Securitas AB on September 3, 2024 and sell it today you would earn a total of  2,039  from holding Securitas AB or generate 17.34% 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.  Byggmax Group AB

Securitas AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Securitas AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Securitas sustained solid returns over the last few months and may actually be approaching a breakup point.

Byggmax Group AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Byggmax Group AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Byggmax Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Securitas and Byggmax Group

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

The idea behind Securitas AB and Byggmax Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.