Correlation Between Vmware and SSC Technologies

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

Diversification Opportunities for Vmware and SSC Technologies

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Vmware and SSC Technologies is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Vmware Inc and SSC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies and Vmware 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 Vmware Inc 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 Vmware i.e., Vmware and SSC Technologies go up and down completely randomly.

Pair Corralation between Vmware and SSC Technologies

Considering the 90-day investment horizon Vmware Inc is expected to generate 2.28 times more return on investment than SSC Technologies. However, Vmware is 2.28 times more volatile than SSC Technologies. It trades about 0.1 of its potential returns per unit of risk. SSC Technologies is currently generating about -0.01 per unit of risk. If you would invest  9,919  in Vmware Inc on April 7, 2022 and sell it today you would earn a total of  1,484  from holding Vmware Inc or generate 14.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy97.5%
ValuesDaily Returns

Vmware Inc  vs.  SSC Technologies

 Performance (%) 
      Timeline 
Vmware Inc 
Vmware Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vmware Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, Vmware may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Payout Ratio
0.0405
Dividend Date
2021-11-01
Ex Dividend Date
2021-11-02

Vmware 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 August 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0135
Payout Ratio
0.15
Last Split Factor
2:1
Forward Annual Dividend Rate
0.8
Dividend Date
2022-06-15
Ex Dividend Date
2022-05-31
Last Split Date
2016-06-27

SSC Technologies Price Channel

Vmware and SSC Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Vmware and SSC Technologies

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

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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 SSC Technologies 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. SSC Technologies' 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, SSC Technologies' 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 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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