Correlation Between SSF Home and Scientex Packaging

Can any of the company-specific risk be diversified away by investing in both SSF Home and Scientex Packaging 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 Scientex Packaging 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 Scientex Packaging, you can compare the effects of market volatilities on SSF Home and Scientex Packaging 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 Scientex Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSF Home and Scientex Packaging.

Diversification Opportunities for SSF Home and Scientex Packaging

-0.53

Correlation Coefficient

SSF Home  Scientex Packaging

Excellent diversification

The 3 months correlation between SSF and Scientex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SSF Home Group and Scientex Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientex Packaging 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 Scientex Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientex Packaging has no effect on the direction of SSF Home i.e., SSF Home and Scientex Packaging go up and down completely randomly.

Pair Corralation between SSF Home and Scientex Packaging

Assuming the 90 days trading horizon SSF Home Group is expected to generate 0.92 times more return on investment than Scientex Packaging. However, SSF Home Group is 1.09 times less risky than Scientex Packaging. It trades about 0.1 of its potential returns per unit of risk. Scientex Packaging is currently generating about -0.2 per unit of risk. If you would invest  34.00  in SSF Home Group on December 23, 2024 and sell it today you would earn a total of  4.00  from holding SSF Home Group or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

SSF Home Group  vs.  Scientex Packaging

SSF Home Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSF Home Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SSF Home disclosed solid returns over the last few months and may actually be approaching a breakup point.

Scientex Packaging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scientex Packaging 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 April 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 Scientex Packaging

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

The idea behind SSF Home Group and Scientex Packaging 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.