Correlation Between SSH Communications and Dovre Group

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

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

Diversification Opportunities for SSH Communications and Dovre Group

-0.12

Correlation Coefficient

SSH Communications  Dovre Group

Good diversification

The 3 months correlation between SSH and Dovre is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and Dovre Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dovre Group Plc and SSH Communications 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 SSH Communications Security are associated (or correlated) with Dovre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dovre Group Plc has no effect on the direction of SSH Communications i.e., SSH Communications and Dovre Group go up and down completely randomly.

Pair Corralation between SSH Communications and Dovre Group

Assuming the 90 days trading horizon SSH Communications is expected to generate 1.4 times less return on investment than Dovre Group. But when comparing it to its historical volatility, SSH Communications Security is 2.45 times less risky than Dovre Group. It trades about 0.05 of its potential returns per unit of risk. Dovre Group Plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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

SSH Communications Security  vs.  Dovre Group Plc

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.

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.

Pair Trading with SSH Communications and Dovre Group

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

The idea behind SSH Communications Security and Dovre Group Plc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.