Correlation Between Magni Tech and SSF Home

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

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

Diversification Opportunities for Magni Tech and SSF Home

-0.55

Correlation Coefficient

Magni Tech  SSF Home

Excellent diversification

The 3 months correlation between Magni and SSF is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Magni Tech Industries and SSF Home Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSF Home Group and Magni Tech 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 Magni Tech Industries are associated (or correlated) with SSF Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSF Home Group has no effect on the direction of Magni Tech i.e., Magni Tech and SSF Home go up and down completely randomly.

Pair Corralation between Magni Tech and SSF Home

Assuming the 90 days trading horizon Magni Tech Industries is expected to under-perform the SSF Home. But the stock apears to be less risky and, when comparing its historical volatility, Magni Tech Industries is 1.59 times less risky than SSF Home. The stock trades about -0.12 of its potential returns per unit of risk. The SSF Home Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  35.00  in SSF Home Group on December 30, 2024 and sell it today you would earn a total of  3.00  from holding SSF Home Group or generate 8.57% return on investment over 90 days.

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

Magni Tech Industries  vs.  SSF Home Group

Magni Tech Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magni Tech Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

SSF Home Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSF Home Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SSF Home may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Magni Tech and SSF Home

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

The idea behind Magni Tech Industries and SSF Home Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.