Correlation Between SSH Communications and EcoUp Oyj

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

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

Diversification Opportunities for SSH Communications and EcoUp Oyj

0.69

Correlation Coefficient

SSH Communications  EcoUp Oyj

Poor diversification

The 3 months correlation between SSH and EcoUp is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and EcoUp Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoUp Oyj and SSH Communications 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 SSH Communications Security are associated (or correlated) with EcoUp Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoUp Oyj has no effect on the direction of SSH Communications i.e., SSH Communications and EcoUp Oyj go up and down completely randomly.

Pair Corralation between SSH Communications and EcoUp Oyj

Assuming the 90 days trading horizon SSH Communications is expected to generate 10.73 times less return on investment than EcoUp Oyj. But when comparing it to its historical volatility, SSH Communications Security is 1.44 times less risky than EcoUp Oyj. It trades about 0.0 of its potential returns per unit of risk. EcoUp Oyj is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  180.00  in EcoUp Oyj on September 17, 2024 and sell it today you would lose (1.00) from holding EcoUp Oyj or give up 0.56% of portfolio value over 90 days.

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

SSH Communications Security  vs.  EcoUp Oyj

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.

EcoUp Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoUp Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, EcoUp Oyj is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SSH Communications and EcoUp Oyj

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

The idea behind SSH Communications Security and EcoUp Oyj 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.