Correlation Between TRX and SSV

Can any of the company-specific risk be diversified away by investing in both TRX and SSV 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 TRX and SSV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRX and SSV, you can compare the effects of market volatilities on TRX and SSV 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 TRX with a short position of SSV. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRX and SSV.

Diversification Opportunities for TRX and SSV

0.63

Correlation Coefficient

TRX  SSV

Poor diversification

The 3 months correlation between TRX and SSV is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding TRX and SSV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSV and TRX 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 TRX are associated (or correlated) with SSV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSV has no effect on the direction of TRX i.e., TRX and SSV go up and down completely randomly.

Pair Corralation between TRX and SSV

Assuming the 90 days trading horizon TRX is expected to generate 2.4 times less return on investment than SSV. But when comparing it to its historical volatility, TRX is 3.8 times less risky than SSV. It trades about 0.19 of its potential returns per unit of risk. SSV is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  638.00  in SSV on April 24, 2025 and sell it today you would earn a total of  347.00  from holding SSV or generate 54.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

TRX  vs.  SSV

TRX

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRX are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, TRX exhibited solid returns over the last few months and may actually be approaching a breakup point.

SSV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SSV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRX and SSV

The main advantage of trading using opposite TRX and SSV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRX position performs unexpectedly, SSV 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 SSV will offset losses from the drop in SSV's long position.

The idea behind TRX and SSV 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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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 the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.