Correlation Between Dovre Group and SSH Communications

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

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

Diversification Opportunities for Dovre Group and SSH Communications

-0.12

Correlation Coefficient

Dovre Group  SSH Communications

Good diversification

The 3 months correlation between Dovre and SSH is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dovre Group Plc and SSH Communications Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSH Communications and Dovre Group 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 Dovre Group Plc 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 Dovre Group i.e., Dovre Group and SSH Communications go up and down completely randomly.

Pair Corralation between Dovre Group and SSH Communications

Assuming the 90 days trading horizon Dovre Group Plc is expected to generate 2.45 times more return on investment than SSH Communications. However, Dovre Group is 2.45 times more volatile than SSH Communications Security. It trades about 0.03 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  23.00  in Dovre Group Plc on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Dovre Group Plc or generate 0.0% return on investment over 90 days.

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

Dovre Group Plc  vs.  SSH Communications Security

Dovre Group Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dovre Group Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Dovre Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Dovre Group and SSH Communications

The main advantage of trading using opposite Dovre Group and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dovre Group 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 Dovre Group Plc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.