Correlation Between Aiforia Technologies and SSH Communications

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

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

Diversification Opportunities for Aiforia Technologies and SSH Communications

0.51

Correlation Coefficient

Aiforia Technologies  SSH Communications

Very weak diversification

The 3 months correlation between Aiforia and SSH is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aiforia Technologies Oyj and SSH Communications Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSH Communications and Aiforia 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 Aiforia Technologies Oyj are associated (or correlated) with SSH Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSH Communications has no effect on the direction of Aiforia Technologies i.e., Aiforia Technologies and SSH Communications go up and down completely randomly.

Pair Corralation between Aiforia Technologies and SSH Communications

Assuming the 90 days trading horizon Aiforia Technologies Oyj is expected to generate 0.77 times more return on investment than SSH Communications. However, Aiforia Technologies Oyj is 1.29 times less risky than SSH Communications. It trades about -0.03 of its potential returns per unit of risk. SSH Communications Security is currently generating about -0.06 per unit of risk. If you would invest  379.00  in Aiforia Technologies Oyj on September 17, 2024 and sell it today you would lose (20.00) from holding Aiforia Technologies Oyj or give up 5.28% of portfolio value over 90 days.

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

Aiforia Technologies Oyj  vs.  SSH Communications Security

Aiforia Technologies Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aiforia Technologies Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aiforia Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Aiforia Technologies and SSH Communications

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

The idea behind Aiforia Technologies Oyj and SSH Communications Security 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.