Correlation Between SSAB AB and Ponsse Oyj

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

By analyzing existing cross correlation between SSAB AB ser and Ponsse Oyj 1, you can compare the effects of market volatilities on SSAB AB and Ponsse Oyj 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 SSAB AB with a short position of Ponsse Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Ponsse Oyj.

Diversification Opportunities for SSAB AB and Ponsse Oyj

0.63

Correlation Coefficient

SSAB AB  Ponsse Oyj

Poor diversification

The 3 months correlation between SSAB and Ponsse is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB ser and Ponsse Oyj 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ponsse Oyj 1 and SSAB AB 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 SSAB AB ser are associated (or correlated) with Ponsse Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ponsse Oyj 1 has no effect on the direction of SSAB AB i.e., SSAB AB and Ponsse Oyj go up and down completely randomly.

Pair Corralation between SSAB AB and Ponsse Oyj

Assuming the 90 days trading horizon SSAB AB is expected to generate 1.57 times less return on investment than Ponsse Oyj. But when comparing it to its historical volatility, SSAB AB ser is 1.02 times less risky than Ponsse Oyj. It trades about 0.1 of its potential returns per unit of risk. Ponsse Oyj 1 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,030  in Ponsse Oyj 1 on October 21, 2024 and sell it today you would earn a total of  70.00  from holding Ponsse Oyj 1 or generate 3.45% return on investment over 90 days.

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

SSAB AB ser  vs.  Ponsse Oyj 1

SSAB AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSAB AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ponsse Oyj 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ponsse Oyj 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Ponsse Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SSAB AB and Ponsse Oyj

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

The idea behind SSAB AB ser and Ponsse Oyj 1 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..