Correlation Between Securitas and Bonava AB

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

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

Diversification Opportunities for Securitas and Bonava AB

-0.34

Correlation Coefficient

Securitas  Bonava AB

Very good diversification

The 3 months correlation between Securitas and Bonava is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Bonava AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonava 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 Bonava AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonava AB has no effect on the direction of Securitas i.e., Securitas and Bonava AB go up and down completely randomly.

Pair Corralation between Securitas and Bonava AB

Assuming the 90 days trading horizon Securitas AB is expected to generate 0.33 times more return on investment than Bonava AB. However, Securitas AB is 3.04 times less risky than Bonava AB. It trades about 0.13 of its potential returns per unit of risk. Bonava AB is currently generating about 0.0 per unit of risk. If you would invest  9,242  in Securitas AB on September 6, 2024 and sell it today you would earn a total of  4,858  from holding Securitas AB or generate 52.56% return on investment over 90 days.

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

Securitas AB  vs.  Bonava AB

Securitas AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Securitas AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Securitas sustained solid returns over the last few months and may actually be approaching a breakup point.

Bonava AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonava AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bonava AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Securitas and Bonava AB

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

The idea behind Securitas AB and Bonava 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.