Correlation Between SSC Security and NL Industries
Can any of the company-specific risk be diversified away by investing in both SSC Security and NL Industries 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 NL Industries 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 NL Industries, you can compare the effects of market volatilities on SSC Security and NL Industries 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 NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSC Security and NL Industries.
Diversification Opportunities for SSC Security and NL Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SSC and NL Industries is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SSC Security Services and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of SSC Security i.e., SSC Security and NL Industries go up and down completely randomly.
Pair Corralation between SSC Security and NL Industries
Assuming the 90 days horizon SSC Security Services is expected to generate 1.63 times more return on investment than NL Industries. However, SSC Security is 1.63 times more volatile than NL Industries. It trades about 0.02 of its potential returns per unit of risk. NL Industries is currently generating about 0.03 per unit of risk. If you would invest 185.00 in SSC Security Services on September 24, 2024 and sell it today you would lose (4.00) from holding SSC Security Services or give up 2.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SSC Security Services vs. NL Industries
Performance |
Timeline |
SSC Security Services |
NL Industries |
SSC Security and NL Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SSC Security and NL Industries
The main advantage of trading using opposite SSC Security and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSC Security position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.SSC Security vs. Bridger Aerospace Group | SSC Security vs. Ameriguard Security Services | SSC Security vs. Global Digital Soltn | SSC Security vs. ATWEC Technologies |
NL Industries vs. International Consolidated Companies | NL Industries vs. Frontera Group | NL Industries vs. All American Pet | NL Industries vs. XCPCNL Business Services |
Check out your portfolio center.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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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