Correlation Between Occidental Petroleum and SSC Technologies

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

Diversification Opportunities for Occidental Petroleum and SSC Technologies

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Occidental and SSC Technologies is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum Corp and SSC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies and Occidental Petroleum 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 Occidental Petroleum Corp 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 Occidental Petroleum i.e., Occidental Petroleum and SSC Technologies go up and down completely randomly.

Pair Corralation between Occidental Petroleum and SSC Technologies

Considering the 90-day investment horizon Occidental Petroleum Corp is expected to generate 1.56 times more return on investment than SSC Technologies. However, Occidental Petroleum is 1.56 times more volatile than SSC Technologies. It trades about 0.21 of its potential returns per unit of risk. SSC Technologies is currently generating about 0.17 per unit of risk. If you would invest  5,723  in Occidental Petroleum Corp on May 15, 2022 and sell it today you would earn a total of  850.00  from holding Occidental Petroleum Corp or generate 14.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

Occidental Petroleum Corp  vs.  SSC Technologies

 Performance (%) 
       Timeline  
Occidental Petroleum Corp 
Occidental Performance
0 of 100
Over the last 90 days Occidental Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Occidental Petroleum is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Occidental Price Channel

SSC Technologies 
SSC Technologies Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SSC Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, SSC Technologies may actually be approaching a critical reversion point that can send shares even higher in September 2022.

SSC Technologies Price Channel

Occidental Petroleum and SSC Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Occidental Petroleum and SSC Technologies

The main advantage of trading using opposite Occidental Petroleum and SSC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum 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.
The idea behind Occidental Petroleum Corp 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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