Correlation Between Securitas and Cloetta AB

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

Diversification Opportunities for Securitas and Cloetta AB

0.83

Correlation Coefficient

Securitas  Cloetta AB

Very poor diversification

The 3 months correlation between Securitas and Cloetta is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Cloetta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloetta 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 Cloetta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloetta AB has no effect on the direction of Securitas i.e., Securitas and Cloetta AB go up and down completely randomly.

Pair Corralation between Securitas and Cloetta AB

Assuming the 90 days trading horizon Securitas AB is expected to generate 0.72 times more return on investment than Cloetta AB. However, Securitas AB is 1.39 times less risky than Cloetta AB. It trades about 0.16 of its potential returns per unit of risk. Cloetta AB is currently generating about 0.09 per unit of risk. If you would invest  13,795  in Securitas AB on November 29, 2024 and sell it today you would earn a total of  1,825  from holding Securitas AB or generate 13.23% return on investment over 90 days.

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

Securitas AB  vs.  Cloetta AB

Securitas AB

Risk-Adjusted Performance

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.

Cloetta AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cloetta AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cloetta AB may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Securitas and Cloetta AB

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

The idea behind Securitas AB and Cloetta 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..