Correlation Between Techtronic Industries and SSC Technologies

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

Diversification Opportunities for Techtronic Industries and SSC Technologies

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Techtronic and SSC Technologies is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Techtronic Industries Ltd and SSC Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies Holdings and Techtronic Industries 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 Techtronic Industries 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 Holdings has no effect on the direction of Techtronic Industries i.e., Techtronic Industries and SSC Technologies go up and down completely randomly.

Pair Corralation between Techtronic Industries and SSC Technologies

Assuming the 90 days horizon Techtronic Industries is expected to generate 1.72 times more return on investment than SSC Technologies. However, Techtronic Industries is 1.72 times more volatile than SSC Technologies Holdings. It trades about 0.02 of its potential returns per unit of risk. SSC Technologies Holdings is currently generating about -0.03 per unit of risk. If you would invest  6,264  in Techtronic Industries on September 6, 2022 and sell it today you would earn a total of  148.00  from holding Techtronic Industries or generate 2.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Techtronic Industries Ltd  vs.  SSC Technologies Holdings

 Performance (%) 
       Timeline  
Techtronic Industries 
Techtronic Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Techtronic Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Techtronic Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Techtronic Price Channel

SSC Technologies Holdings 
SSC Technologies Performance
0 of 100
Over the last 90 days SSC Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SSC Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

SSC Technologies Price Channel

Techtronic Industries and SSC Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Techtronic Industries and SSC Technologies

The main advantage of trading using opposite Techtronic Industries and SSC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techtronic Industries 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 Techtronic Industries and SSC Technologies Holdings 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 CEO Directory module to screen CEOs from public companies around the world.

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