Correlation Between SSC Technologies and Descartes Systems

Can any of the company-specific risk be diversified away by investing in both SSC Technologies and Descartes Systems 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 SSC Technologies and Descartes Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SSC Technologies Holdings and Descartes Systems Group, you can compare the effects of market volatilities on SSC Technologies and Descartes Systems 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 SSC Technologies with a short position of Descartes Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSC Technologies and Descartes Systems.

Diversification Opportunities for SSC Technologies and Descartes Systems

-0.11

Correlation Coefficient

SSC Technologies  Descartes Systems

Good diversification

The 3 months correlation between SSC and Descartes is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SSC Technologies Holdings and Descartes Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Descartes Systems and SSC Technologies 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 SSC Technologies Holdings are associated (or correlated) with Descartes Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Descartes Systems has no effect on the direction of SSC Technologies i.e., SSC Technologies and Descartes Systems go up and down completely randomly.

Pair Corralation between SSC Technologies and Descartes Systems

Given the investment horizon of 90 days SSC Technologies Holdings is expected to generate 0.71 times more return on investment than Descartes Systems. However, SSC Technologies Holdings is 1.41 times less risky than Descartes Systems. It trades about 0.11 of its potential returns per unit of risk. Descartes Systems Group is currently generating about -0.1 per unit of risk. If you would invest  7,545  in SSC Technologies Holdings on December 29, 2024 and sell it today you would earn a total of  653.00  from holding SSC Technologies Holdings or generate 8.65% return on investment over 90 days.

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

SSC Technologies Holdings  vs.  Descartes Systems Group

SSC Technologies Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSC Technologies Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, SSC Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Descartes Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Descartes Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SSC Technologies and Descartes Systems

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

The idea behind SSC Technologies Holdings and Descartes Systems Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.