Correlation Between SSH Communications and Trainers House

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

Diversification Opportunities for SSH Communications and Trainers House

0.72

Correlation Coefficient

SSH Communications  Trainers House

Poor diversification

The 3 months correlation between SSH and Trainers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and Trainers House Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainers House 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 Trainers House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainers House Oyj has no effect on the direction of SSH Communications i.e., SSH Communications and Trainers House go up and down completely randomly.

Pair Corralation between SSH Communications and Trainers House

Assuming the 90 days trading horizon SSH Communications Security is expected to under-perform the Trainers House. But the stock apears to be less risky and, when comparing its historical volatility, SSH Communications Security is 1.16 times less risky than Trainers House. The stock trades about -0.09 of its potential returns per unit of risk. The Trainers House Oyj is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  235.00  in Trainers House Oyj on August 31, 2024 and sell it today you would lose (18.00) from holding Trainers House Oyj or give up 7.66% of portfolio value over 90 days.

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

SSH Communications Security  vs.  Trainers House 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 inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Trainers House Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SSH Communications and Trainers House

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

The idea behind SSH Communications Security and Trainers House 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.