Correlation Between SSH Communications and Kempower Oyj

Can any of the company-specific risk be diversified away by investing in both SSH Communications and Kempower 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 SSH Communications and Kempower Oyj 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 Kempower Oyj, you can compare the effects of market volatilities on SSH Communications and Kempower 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 SSH Communications with a short position of Kempower Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSH Communications and Kempower Oyj.

Diversification Opportunities for SSH Communications and Kempower Oyj

0.78

Correlation Coefficient

SSH Communications  Kempower Oyj

Poor diversification

The 3 months correlation between SSH and Kempower is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and Kempower Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kempower Oyj 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 Kempower Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kempower Oyj has no effect on the direction of SSH Communications i.e., SSH Communications and Kempower Oyj go up and down completely randomly.

Pair Corralation between SSH Communications and Kempower Oyj

Assuming the 90 days trading horizon SSH Communications Security is expected to under-perform the Kempower Oyj. In addition to that, SSH Communications is 1.19 times more volatile than Kempower Oyj. It trades about -0.06 of its total potential returns per unit of risk. Kempower Oyj is currently generating about 0.25 per unit of volatility. If you would invest  932.00  in Kempower Oyj on October 9, 2024 and sell it today you would earn a total of  108.00  from holding Kempower Oyj or generate 11.59% return on investment over 90 days.

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

SSH Communications Security  vs.  Kempower Oyj

SSH Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSH Communications Security has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Kempower Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kempower Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kempower Oyj is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SSH Communications and Kempower Oyj

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

The idea behind SSH Communications Security and Kempower Oyj 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.