Correlation Between Mistras and SSC Security

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

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

Diversification Opportunities for Mistras and SSC Security

-0.39

Correlation Coefficient

Mistras  SSC Security

Very good diversification

The 3 months correlation between Mistras and SSC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and SSC Security Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Security Services and Mistras 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 Mistras Group are associated (or correlated) with SSC Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSC Security Services has no effect on the direction of Mistras i.e., Mistras and SSC Security go up and down completely randomly.

Pair Corralation between Mistras and SSC Security

Allowing for the 90-day total investment horizon Mistras Group is expected to under-perform the SSC Security. In addition to that, Mistras is 3.75 times more volatile than SSC Security Services. It trades about -0.05 of its total potential returns per unit of risk. SSC Security Services is currently generating about 0.06 per unit of volatility. If you would invest  185.00  in SSC Security Services on September 14, 2024 and sell it today you would earn a total of  6.00  from holding SSC Security Services or generate 3.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mistras Group  vs.  SSC Security Services

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SSC Security Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SSC Security Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SSC Security is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mistras and SSC Security

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

The idea behind Mistras Group and SSC Security Services 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.