Correlation Between Secure Energy and Baylin Technologies

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

By analyzing existing cross correlation between Secure Energy Services and Baylin Technologies, you can compare the effects of market volatilities on Secure Energy and Baylin Technologies 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 Secure Energy with a short position of Baylin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secure Energy and Baylin Technologies.

Diversification Opportunities for Secure Energy and Baylin Technologies

0.29

Correlation Coefficient

Secure Energy  Baylin Technologies

Modest diversification

The 3 months correlation between Secure and Baylin is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and Secure Energy 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 Secure Energy Services are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of Secure Energy i.e., Secure Energy and Baylin Technologies go up and down completely randomly.

Pair Corralation between Secure Energy and Baylin Technologies

Assuming the 90 days trading horizon Secure Energy Services is expected to generate 0.36 times more return on investment than Baylin Technologies. However, Secure Energy Services is 2.79 times less risky than Baylin Technologies. It trades about 0.19 of its potential returns per unit of risk. Baylin Technologies is currently generating about -0.15 per unit of risk. If you would invest  1,130  in Secure Energy Services on April 4, 2024 and sell it today you would earn a total of  84.00  from holding Secure Energy Services or generate 7.43% return on investment over 90 days.

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

Secure Energy Services  vs.  Baylin Technologies

Secure Energy Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Secure Energy may actually be approaching a critical reversion point that can send shares even higher in August 2024.

Baylin Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baylin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in August 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Secure Energy and Baylin Technologies

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

The idea behind Secure Energy Services and Baylin Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.