Correlation Between SSF Home and Dnonce Tech

Can any of the company-specific risk be diversified away by investing in both SSF Home and Dnonce Tech 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 SSF Home and Dnonce Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SSF Home Group and Dnonce Tech Bhd, you can compare the effects of market volatilities on SSF Home and Dnonce Tech 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 SSF Home with a short position of Dnonce Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSF Home and Dnonce Tech.

Diversification Opportunities for SSF Home and Dnonce Tech

0.21

Correlation Coefficient

SSF Home  Dnonce Tech

Modest diversification

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

Pair Corralation between SSF Home and Dnonce Tech

Assuming the 90 days trading horizon SSF Home Group is expected to generate 0.37 times more return on investment than Dnonce Tech. However, SSF Home Group is 2.72 times less risky than Dnonce Tech. It trades about -0.03 of its potential returns per unit of risk. Dnonce Tech Bhd is currently generating about -0.06 per unit of risk. If you would invest  35.00  in SSF Home Group on September 5, 2024 and sell it today you would lose (1.00) from holding SSF Home Group or give up 2.86% of portfolio value over 90 days.

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

SSF Home Group  vs.  Dnonce Tech Bhd

SSF Home Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSF Home Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SSF Home is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Dnonce Tech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dnonce Tech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with SSF Home and Dnonce Tech

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

The idea behind SSF Home Group and Dnonce Tech Bhd 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..