Correlation Between MSA Safety and Supercom

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

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

Diversification Opportunities for MSA Safety and Supercom

-0.59

Correlation Coefficient

MSA Safety  Supercom

Excellent diversification

The 3 months correlation between MSA and Supercom is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom and MSA Safety 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 MSA Safety are associated (or correlated) with Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of MSA Safety i.e., MSA Safety and Supercom go up and down completely randomly.

Pair Corralation between MSA Safety and Supercom

Considering the 90-day investment horizon MSA Safety is expected to under-perform the Supercom. But the stock apears to be less risky and, when comparing its historical volatility, MSA Safety is 9.43 times less risky than Supercom. The stock trades about 0.0 of its potential returns per unit of risk. The Supercom is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Supercom on October 24, 2024 and sell it today you would earn a total of  984.00  from holding Supercom or generate 289.41% return on investment over 90 days.

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

MSA Safety  vs.  Supercom

MSA Safety

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSA Safety has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MSA Safety is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Supercom

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Supercom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSA Safety and Supercom

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

The idea behind MSA Safety and Supercom 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.