Correlation Between SSC Security and Brady

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

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

Diversification Opportunities for SSC Security and Brady

0.13

Correlation Coefficient

SSC Security  Brady

Average diversification

The 3 months correlation between SSC and Brady is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SSC Security Services and Brady in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brady and SSC Security 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 SSC Security Services are associated (or correlated) with Brady. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brady has no effect on the direction of SSC Security i.e., SSC Security and Brady go up and down completely randomly.

Pair Corralation between SSC Security and Brady

Assuming the 90 days horizon SSC Security is expected to generate 1.11 times less return on investment than Brady. In addition to that, SSC Security is 3.73 times more volatile than Brady. It trades about 0.02 of its total potential returns per unit of risk. Brady is currently generating about 0.1 per unit of volatility. If you would invest  5,917  in Brady on September 24, 2024 and sell it today you would earn a total of  1,496  from holding Brady or generate 25.28% return on investment over 90 days.

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

SSC Security Services  vs.  Brady

SSC Security Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSC Security Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SSC Security is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Brady

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brady has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Brady is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SSC Security and Brady

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

The idea behind SSC Security Services and Brady 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.