Correlation Between Alandsbanken Abp and SSH Communications

Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp and SSH Communications 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 Alandsbanken Abp and SSH Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alandsbanken Abp A and SSH Communications Security, you can compare the effects of market volatilities on Alandsbanken Abp and SSH Communications 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 Alandsbanken Abp with a short position of SSH Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and SSH Communications.

Diversification Opportunities for Alandsbanken Abp and SSH Communications

0.34

Correlation Coefficient

Alandsbanken Abp  SSH Communications

Weak diversification

The 3 months correlation between Alandsbanken and SSH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp A and SSH Communications Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSH Communications and Alandsbanken Abp 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 Alandsbanken Abp A are associated (or correlated) with SSH Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSH Communications has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and SSH Communications go up and down completely randomly.

Pair Corralation between Alandsbanken Abp and SSH Communications

Assuming the 90 days trading horizon Alandsbanken Abp A is expected to generate 0.41 times more return on investment than SSH Communications. However, Alandsbanken Abp A is 2.47 times less risky than SSH Communications. It trades about -0.01 of its potential returns per unit of risk. SSH Communications Security is currently generating about -0.11 per unit of risk. If you would invest  3,530  in Alandsbanken Abp A on September 4, 2024 and sell it today you would lose (30.00) from holding Alandsbanken Abp A or give up 0.85% of portfolio value over 90 days.

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

Alandsbanken Abp A  vs.  SSH Communications Security

Alandsbanken Abp A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alandsbanken Abp A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Alandsbanken Abp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

SSH Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSH Communications Security has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Alandsbanken Abp and SSH Communications

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

The idea behind Alandsbanken Abp A and SSH Communications Security 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.