Correlation Between Alma Media and SSH Communications

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

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

Diversification Opportunities for Alma Media and SSH Communications

-0.37

Correlation Coefficient

Alma Media  SSH Communications

Very good diversification

The 3 months correlation between Alma and SSH is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alma Media 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 Alma Media 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 Alma Media 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 Alma Media i.e., Alma Media and SSH Communications go up and down completely randomly.

Pair Corralation between Alma Media and SSH Communications

Assuming the 90 days trading horizon Alma Media Oyj is expected to generate 0.58 times more return on investment than SSH Communications. However, Alma Media Oyj is 1.73 times less risky than SSH Communications. It trades about 0.09 of its potential returns per unit of risk. SSH Communications Security is currently generating about -0.07 per unit of risk. If you would invest  1,070  in Alma Media Oyj on September 12, 2024 and sell it today you would earn a total of  90.00  from holding Alma Media Oyj or generate 8.41% return on investment over 90 days.

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

Alma Media Oyj  vs.  SSH Communications Security

Alma Media Oyj

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alma Media Oyj are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Alma Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Alma Media and SSH Communications

The main advantage of trading using opposite Alma Media and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alma Media 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 Alma Media 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.