Correlation Between SSH Communications and Metsa Board
Can any of the company-specific risk be diversified away by investing in both SSH Communications and Metsa Board 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 Metsa Board 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 Metsa Board Oyj, you can compare the effects of market volatilities on SSH Communications and Metsa Board 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 Metsa Board. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSH Communications and Metsa Board.
Diversification Opportunities for SSH Communications and Metsa Board
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SSH and Metsa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and Metsa Board Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metsa Board 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 Metsa Board. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metsa Board Oyj has no effect on the direction of SSH Communications i.e., SSH Communications and Metsa Board go up and down completely randomly.
Pair Corralation between SSH Communications and Metsa Board
Assuming the 90 days trading horizon SSH Communications Security is expected to generate 1.59 times more return on investment than Metsa Board. However, SSH Communications is 1.59 times more volatile than Metsa Board Oyj. It trades about -0.1 of its potential returns per unit of risk. Metsa Board Oyj is currently generating about -0.27 per unit of risk. If you would invest 118.00 in SSH Communications Security on August 30, 2024 and sell it today you would lose (16.00) from holding SSH Communications Security or give up 13.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSH Communications Security vs. Metsa Board Oyj
Performance |
| Timeline |
| SSH Communications |
| Metsa Board Oyj |
SSH Communications and Metsa Board Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSH Communications and Metsa Board
The main advantage of trading using opposite SSH Communications and Metsa Board positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSH Communications position performs unexpectedly, Metsa Board 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 Metsa Board will offset losses from the drop in Metsa Board's long position.| SSH Communications vs. Tecnotree Oyj | SSH Communications vs. Qt Group Oyj | SSH Communications vs. Harvia Oyj | SSH Communications vs. Kamux Suomi Oy |
| Metsa Board vs. UPM Kymmene Oyj | Metsa Board vs. Stora Enso Oyj | Metsa Board vs. Metsa Board Oyj | Metsa Board vs. Valmet Oyj |
Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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