Correlation Between Damsan JSC and SSI Securities

Can any of the company-specific risk be diversified away by investing in both Damsan JSC and SSI Securities 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 Damsan JSC and SSI Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Damsan JSC and SSI Securities Corp, you can compare the effects of market volatilities on Damsan JSC and SSI Securities 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 Damsan JSC with a short position of SSI Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and SSI Securities.

Diversification Opportunities for Damsan JSC and SSI Securities

0.8

Correlation Coefficient

Damsan JSC  SSI Securities

Very poor diversification

The 3 months correlation between Damsan and SSI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and SSI Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSI Securities Corp and Damsan JSC 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 Damsan JSC are associated (or correlated) with SSI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSI Securities Corp has no effect on the direction of Damsan JSC i.e., Damsan JSC and SSI Securities go up and down completely randomly.

Pair Corralation between Damsan JSC and SSI Securities

Assuming the 90 days trading horizon Damsan JSC is expected to generate 4.54 times less return on investment than SSI Securities. In addition to that, Damsan JSC is 1.31 times more volatile than SSI Securities Corp. It trades about 0.04 of its total potential returns per unit of risk. SSI Securities Corp is currently generating about 0.25 per unit of volatility. If you would invest  2,385,000  in SSI Securities Corp on September 20, 2024 and sell it today you would earn a total of  235,000  from holding SSI Securities Corp or generate 9.85% return on investment over 90 days.

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

Damsan JSC  vs.  SSI Securities Corp

Damsan JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damsan JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SSI Securities Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSI Securities Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, SSI Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Damsan JSC and SSI Securities

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

The idea behind Damsan JSC and SSI Securities Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.