Correlation Between Evolv Technologies and Secom Co

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

By analyzing existing cross correlation between Evolv Technologies Holdings and Secom Co Ltd, you can compare the effects of market volatilities on Evolv Technologies and Secom Co 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 Evolv Technologies with a short position of Secom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolv Technologies and Secom Co.

Diversification Opportunities for Evolv Technologies and Secom Co

0.56

Correlation Coefficient

Evolv Technologies  Secom Co

Very weak diversification

The 3 months correlation between Evolv and Secom is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Evolv Technologies Holdings and Secom Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secom Co and Evolv Technologies 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 Evolv Technologies Holdings are associated (or correlated) with Secom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secom Co has no effect on the direction of Evolv Technologies i.e., Evolv Technologies and Secom Co go up and down completely randomly.

Pair Corralation between Evolv Technologies and Secom Co

Given the investment horizon of 90 days Evolv Technologies Holdings is expected to generate 4.98 times more return on investment than Secom Co. However, Evolv Technologies is 4.98 times more volatile than Secom Co Ltd. It trades about 0.07 of its potential returns per unit of risk. Secom Co Ltd is currently generating about -0.05 per unit of risk. If you would invest  360.00  in Evolv Technologies Holdings on September 3, 2024 and sell it today you would earn a total of  45.00  from holding Evolv Technologies Holdings or generate 12.5% return on investment over 90 days.

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

Evolv Technologies Holdings  vs.  Secom Co Ltd

Evolv Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolv Technologies Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Evolv Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Secom Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Secom Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Secom Co is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evolv Technologies and Secom Co

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

The idea behind Evolv Technologies Holdings and Secom Co Ltd 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.