Correlation Between Securitas and Sprint Bioscience

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

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

Diversification Opportunities for Securitas and Sprint Bioscience

-0.46

Correlation Coefficient

Securitas  Sprint Bioscience

Very good diversification

The 3 months correlation between Securitas and Sprint is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Securitas AB and Sprint Bioscience AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprint Bioscience 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 Sprint Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprint Bioscience has no effect on the direction of Securitas i.e., Securitas and Sprint Bioscience go up and down completely randomly.

Pair Corralation between Securitas and Sprint Bioscience

Assuming the 90 days trading horizon Securitas AB is expected to generate 0.42 times more return on investment than Sprint Bioscience. However, Securitas AB is 2.4 times less risky than Sprint Bioscience. It trades about 0.21 of its potential returns per unit of risk. Sprint Bioscience AB is currently generating about -0.03 per unit of risk. If you would invest  13,635  in Securitas AB on December 2, 2024 and sell it today you would earn a total of  1,955  from holding Securitas AB or generate 14.34% return on investment over 90 days.

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

Securitas AB  vs.  Sprint Bioscience 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.

Sprint Bioscience

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprint Bioscience AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Securitas and Sprint Bioscience

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

The idea behind Securitas AB and Sprint Bioscience 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.