Correlation Between SSI Securities and Song Hong

Can any of the company-specific risk be diversified away by investing in both SSI Securities and Song Hong 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 SSI Securities and Song Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SSI Securities Corp and Song Hong Construction, you can compare the effects of market volatilities on SSI Securities and Song Hong 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 SSI Securities with a short position of Song Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSI Securities and Song Hong.

Diversification Opportunities for SSI Securities and Song Hong

0.74

Correlation Coefficient

SSI Securities  Song Hong

Poor diversification

The 3 months correlation between SSI and Song is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SSI Securities Corp and Song Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Hong Construction and SSI Securities 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 SSI Securities Corp are associated (or correlated) with Song Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Hong Construction has no effect on the direction of SSI Securities i.e., SSI Securities and Song Hong go up and down completely randomly.

Pair Corralation between SSI Securities and Song Hong

Assuming the 90 days trading horizon SSI Securities Corp is expected to under-perform the Song Hong. But the stock apears to be less risky and, when comparing its historical volatility, SSI Securities Corp is 2.0 times less risky than Song Hong. The stock trades about -0.02 of its potential returns per unit of risk. The Song Hong Construction is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  670,000  in Song Hong Construction on October 7, 2024 and sell it today you would earn a total of  120,000  from holding Song Hong Construction or generate 17.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.19%
Values	Daily Returns

SSI Securities Corp  vs.  Song Hong Construction

SSI Securities Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSI Securities Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, SSI Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Song Hong Construction

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Song Hong Construction are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Song Hong displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SSI Securities and Song Hong

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

The idea behind SSI Securities Corp and Song Hong Construction 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.