Correlation Between Bittium Oyj and SSH Communications

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

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

Diversification Opportunities for Bittium Oyj and SSH Communications

-0.33

Correlation Coefficient

Bittium Oyj  SSH Communications

Very good diversification

The 3 months correlation between Bittium and SSH is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bittium 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 Bittium Oyj 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 Bittium 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 Bittium Oyj i.e., Bittium Oyj and SSH Communications go up and down completely randomly.

Pair Corralation between Bittium Oyj and SSH Communications

Assuming the 90 days trading horizon Bittium Oyj is expected to generate 0.58 times more return on investment than SSH Communications. However, Bittium Oyj is 1.71 times less risky than SSH Communications. It trades about 0.16 of its potential returns per unit of risk. SSH Communications Security is currently generating about 0.08 per unit of risk. If you would invest  662.00  in Bittium Oyj on September 12, 2024 and sell it today you would earn a total of  40.00  from holding Bittium Oyj or generate 6.04% return on investment over 90 days.

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

Bittium Oyj  vs.  SSH Communications Security

Bittium Oyj

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bittium Oyj are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Bittium Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 Bittium Oyj and SSH Communications

The main advantage of trading using opposite Bittium Oyj and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bittium Oyj 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 Bittium 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.