Correlation Between Zwipe AS and SECITS Holding

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

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

Diversification Opportunities for Zwipe AS and SECITS Holding

0.21

Correlation Coefficient

Zwipe AS  SECITS Holding

Modest diversification

The 3 months correlation between Zwipe and SECITS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zwipe AS and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS Holding AB and Zwipe AS 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 Zwipe AS are associated (or correlated) with SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of Zwipe AS i.e., Zwipe AS and SECITS Holding go up and down completely randomly.

Pair Corralation between Zwipe AS and SECITS Holding

Assuming the 90 days trading horizon Zwipe AS is expected to under-perform the SECITS Holding. In addition to that, Zwipe AS is 2.39 times more volatile than SECITS Holding AB. It trades about 0.0 of its total potential returns per unit of risk. SECITS Holding AB is currently generating about 0.04 per unit of volatility. If you would invest  3.00  in SECITS Holding AB on December 28, 2024 and sell it today you would lose (0.22) from holding SECITS Holding AB or give up 7.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.33%
Values	Daily Returns

Zwipe AS  vs.  SECITS Holding AB

Zwipe AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zwipe AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 3 (%) 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.

Pair Trading with Zwipe AS and SECITS Holding

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

The idea behind Zwipe AS and SECITS Holding 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.