Correlation Between Ipath Series and SSC Technologies

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

Diversification Opportunities for Ipath Series and SSC Technologies

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Ipath and SSC Technologies is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ipath Series B and SSC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies and Ipath Series 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 Ipath Series B 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 Ipath Series i.e., Ipath Series and SSC Technologies go up and down completely randomly.

Pair Corralation between Ipath Series and SSC Technologies

Considering the 90-day investment horizon Ipath Series is expected to generate 1.02 times less return on investment than SSC Technologies. In addition to that, Ipath Series is 1.07 times more volatile than SSC Technologies. It trades about 0.06 of its total potential returns per unit of risk. SSC Technologies is currently generating about 0.07 per unit of volatility. If you would invest  5,894  in SSC Technologies on May 12, 2022 and sell it today you would earn a total of  163.00  from holding SSC Technologies or generate 2.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Ipath Series B  vs.  SSC Technologies

 Performance (%) 
       Timeline  
Ipath Series B 
Ipath Performance
0 of 100
Over the last 90 days Ipath Series B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ipath Series is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Ipath Price Channel

SSC Technologies 
SSC Technologies Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SSC Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SSC Technologies is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

SSC Technologies Price Channel

Ipath Series and SSC Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ipath Series and SSC Technologies

The main advantage of trading using opposite Ipath Series and SSC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ipath Series 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.

Ipath Series B

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Ipath Series as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Ipath Series' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Ipath Series' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Ipath Series B.
The idea behind Ipath Series B 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.

SSC Technologies

Pair trading matchups for SSC Technologies

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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