Correlation Between Blackline and SSC Technologies

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

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

Diversification Opportunities for Blackline and SSC Technologies

0.42

Correlation Coefficient

Blackline  SSC Technologies

Very weak diversification

The 3 months correlation between Blackline and SSC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and SSC Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies Holdings and Blackline 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 Blackline are associated (or correlated) with SSC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSC Technologies Holdings has no effect on the direction of Blackline i.e., Blackline and SSC Technologies go up and down completely randomly.

Pair Corralation between Blackline and SSC Technologies

Allowing for the 90-day total investment horizon Blackline is expected to generate 1.4 times more return on investment than SSC Technologies. However, Blackline is 1.4 times more volatile than SSC Technologies Holdings. It trades about 0.18 of its potential returns per unit of risk. SSC Technologies Holdings is currently generating about -0.01 per unit of risk. If you would invest  5,198  in Blackline on September 20, 2024 and sell it today you would earn a total of  1,105  from holding Blackline or generate 21.26% return on investment over 90 days.

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

Blackline  vs.  SSC Technologies Holdings

Blackline

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Blackline disclosed solid returns over the last few months and may actually be approaching a breakup point.

SSC Technologies Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSC Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SSC Technologies is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blackline and SSC Technologies

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

The idea behind Blackline and SSC Technologies Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.