Correlation Between ASSA ABLOY and Tempest Security

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

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

Diversification Opportunities for ASSA ABLOY and Tempest Security

-0.73

Correlation Coefficient

ASSA ABLOY  Tempest Security

Pay attention - limited upside

The 3 months correlation between ASSA and Tempest is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Tempest Security AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempest Security and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with Tempest Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempest Security has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Tempest Security go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Tempest Security

Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.37 times more return on investment than Tempest Security. However, ASSA ABLOY AB is 2.68 times less risky than Tempest Security. It trades about -0.13 of its potential returns per unit of risk. Tempest Security AB is currently generating about -0.1 per unit of risk. If you would invest  30,365  in ASSA ABLOY AB on February 3, 2024 and sell it today you would lose (925.00) from holding ASSA ABLOY AB or give up 3.05% of portfolio value over 90 days.

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

ASSA ABLOY AB  vs.  Tempest Security AB

ASSA ABLOY AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASSA ABLOY AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ASSA ABLOY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tempest Security

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempest Security AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ASSA ABLOY and Tempest Security

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

The idea behind ASSA ABLOY AB and Tempest Security 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.