Correlation Between Ameriguard Security and ASSA ABLOY

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

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

Diversification Opportunities for Ameriguard Security and ASSA ABLOY

0.36

Correlation Coefficient

Ameriguard Security  ASSA ABLOY

Weak diversification

The 3 months correlation between Ameriguard and ASSA is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ameriguard Security Services and ASSA ABLOY AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSA ABLOY AB and Ameriguard Security 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 Ameriguard Security Services are associated (or correlated) with ASSA ABLOY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSA ABLOY AB has no effect on the direction of Ameriguard Security i.e., Ameriguard Security and ASSA ABLOY go up and down completely randomly.

Pair Corralation between Ameriguard Security and ASSA ABLOY

Given the investment horizon of 90 days Ameriguard Security Services is expected to under-perform the ASSA ABLOY. In addition to that, Ameriguard Security is 7.18 times more volatile than ASSA ABLOY AB. It trades about -0.09 of its total potential returns per unit of risk. ASSA ABLOY AB is currently generating about 0.17 per unit of volatility. If you would invest  2,861  in ASSA ABLOY AB on September 5, 2024 and sell it today you would earn a total of  225.00  from holding ASSA ABLOY AB or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Ameriguard Security Services  vs.  ASSA ABLOY AB

Ameriguard Security

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameriguard Security Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ASSA ABLOY AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASSA ABLOY AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ASSA ABLOY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ameriguard Security and ASSA ABLOY

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

The idea behind Ameriguard Security Services and ASSA ABLOY 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.