Correlation Between SSH Communications and Telia Company
Can any of the company-specific risk be diversified away by investing in both SSH Communications and Telia Company 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 Telia Company 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 Telia Company AB, you can compare the effects of market volatilities on SSH Communications and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSH Communications and Telia Company.
Diversification Opportunities for SSH Communications and Telia Company
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SSH and Telia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of SSH Communications i.e., SSH Communications and Telia Company go up and down completely randomly.
Pair Corralation between SSH Communications and Telia Company
Assuming the 90 days trading horizon SSH Communications Security is expected to under-perform the Telia Company. In addition to that, SSH Communications is 2.68 times more volatile than Telia Company AB. It trades about -0.14 of its total potential returns per unit of risk. Telia Company AB is currently generating about 0.07 per unit of volatility. If you would invest 270.00 in Telia Company AB on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Telia Company AB or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSH Communications Security vs. Telia Company AB
Performance |
| Timeline |
| SSH Communications |
| Telia Company |
SSH Communications and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSH Communications and Telia Company
The main advantage of trading using opposite SSH Communications and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSH Communications position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company's long position.| SSH Communications vs. Tecnotree Oyj | SSH Communications vs. Qt Group Oyj | SSH Communications vs. Bittium Oyj | SSH Communications vs. Harvia Oyj |
| Telia Company vs. Nordea Bank Abp | Telia Company vs. Sampo Oyj A | Telia Company vs. Fortum Oyj | Telia Company vs. Wartsila Oyj Abp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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