Correlation Between Nightingale Health and SSH Communications

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

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

Diversification Opportunities for Nightingale Health and SSH Communications

0.33

Correlation Coefficient

Nightingale Health  SSH Communications

Weak diversification

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

Pair Corralation between Nightingale Health and SSH Communications

Assuming the 90 days trading horizon Nightingale Health Oyj is expected to generate 1.56 times more return on investment than SSH Communications. However, Nightingale Health is 1.56 times more volatile than SSH Communications Security. It trades about -0.02 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  329.00  in Nightingale Health Oyj on September 16, 2024 and sell it today you would lose (35.00) from holding Nightingale Health Oyj or give up 10.64% of portfolio value over 90 days.

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

Nightingale Health Oyj  vs.  SSH Communications Security

Nightingale Health Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nightingale Health Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nightingale Health is not utilizing all of its potentials. The newest 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 Nightingale Health and SSH Communications

The main advantage of trading using opposite Nightingale Health and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nightingale Health 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 Nightingale Health 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.