Correlation Between SSH Communications and Lemonsoft Oyj

Can any of the company-specific risk be diversified away by investing in both SSH Communications and Lemonsoft 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 Lemonsoft 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 Lemonsoft Oyj, you can compare the effects of market volatilities on SSH Communications and Lemonsoft 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 Lemonsoft Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSH Communications and Lemonsoft Oyj.

Diversification Opportunities for SSH Communications and Lemonsoft Oyj

0.28

Correlation Coefficient

SSH Communications  Lemonsoft Oyj

Modest diversification

The 3 months correlation between SSH and Lemonsoft is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and Lemonsoft Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemonsoft 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 Lemonsoft Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemonsoft Oyj has no effect on the direction of SSH Communications i.e., SSH Communications and Lemonsoft Oyj go up and down completely randomly.

Pair Corralation between SSH Communications and Lemonsoft Oyj

Assuming the 90 days trading horizon SSH Communications Security is expected to generate 0.64 times more return on investment than Lemonsoft Oyj. However, SSH Communications Security is 1.56 times less risky than Lemonsoft Oyj. It trades about 0.0 of its potential returns per unit of risk. Lemonsoft Oyj is currently generating about -0.01 per unit of risk. If you would invest  130.00  in SSH Communications Security on March 5, 2024 and sell it today you would lose (2.00) from holding SSH Communications Security or give up 1.54% of portfolio value over 90 days.

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

SSH Communications Security  vs.  Lemonsoft 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 fairly strong basic indicators, SSH Communications is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Lemonsoft Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lemonsoft Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Lemonsoft 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 Lemonsoft Oyj

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

The idea behind SSH Communications Security and Lemonsoft 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.