Correlation Between La Z and SSC Technologies

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Can any of the company-specific risk be diversified away by investing in both La Z and SSC Technologies 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 La Z and SSC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between La-Z-Boy and SSC Technologies, you can compare the effects of market volatilities on La Z and SSC Technologies 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 La Z with a short position of SSC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Z and SSC Technologies.

Diversification Opportunities for La Z and SSC Technologies

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between La Z and SSC Technologies is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding La-Z-Boy and SSC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies and La Z 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 La-Z-Boy are associated (or correlated) with SSC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSC Technologies has no effect on the direction of La Z i.e., La Z and SSC Technologies go up and down completely randomly.

Pair Corralation between La Z and SSC Technologies

Considering the 90-day investment horizon La-Z-Boy is expected to under-perform the SSC Technologies. In addition to that, La Z is 1.45 times more volatile than SSC Technologies. It trades about -0.2 of its total potential returns per unit of risk. SSC Technologies is currently generating about -0.23 per unit of volatility. If you would invest  6,024  in SSC Technologies on July 9, 2022 and sell it today you would lose (962.00)  from holding SSC Technologies or give up 15.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

La-Z-Boy  vs.  SSC Technologies

 Performance (%) 
       Timeline  
La-Z-Boy 
La Z Performance
0 of 100
Over the last 90 days La-Z-Boy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

La Z Price Channel

SSC Technologies 
SSC Technologies Performance
0 of 100
Over the last 90 days SSC Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

SSC Technologies Price Channel

La Z and SSC Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with La Z and SSC Technologies

The main advantage of trading using opposite La Z and SSC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z position performs unexpectedly, SSC Technologies 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 Technologies will offset losses from the drop in SSC Technologies' long position.
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The idea behind La-Z-Boy and SSC Technologies 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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