Correlation Between CapMan Oyj and SSH Communications

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

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

Diversification Opportunities for CapMan Oyj and SSH Communications

0.84

Correlation Coefficient

CapMan Oyj  SSH Communications

Very poor diversification

The 3 months correlation between CapMan and SSH is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B and SSH Communications Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSH Communications and CapMan Oyj 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 CapMan Oyj B 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 CapMan Oyj i.e., CapMan Oyj and SSH Communications go up and down completely randomly.

Pair Corralation between CapMan Oyj and SSH Communications

Assuming the 90 days trading horizon CapMan Oyj B is expected to generate 0.79 times more return on investment than SSH Communications. However, CapMan Oyj B is 1.26 times less risky than SSH Communications. It trades about 0.12 of its potential returns per unit of risk. SSH Communications Security is currently generating about 0.05 per unit of risk. If you would invest  165.00  in CapMan Oyj B on December 30, 2024 and sell it today you would earn a total of  21.00  from holding CapMan Oyj B or generate 12.73% return on investment over 90 days.

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

CapMan Oyj B  vs.  SSH Communications Security

CapMan Oyj B

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CapMan Oyj B are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CapMan Oyj sustained solid returns over the last few months and may actually be approaching a breakup point.

SSH Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SSH Communications Security are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, SSH Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CapMan Oyj and SSH Communications

The main advantage of trading using opposite CapMan Oyj and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapMan Oyj 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 CapMan Oyj B 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.