Correlation Between Compagnie Plastic and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Compagnie Plastic and Scandinavian Tobacco 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 Compagnie Plastic and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Plastic Omnium and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Compagnie Plastic and Scandinavian Tobacco 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 Compagnie Plastic with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Plastic and Scandinavian Tobacco.
Diversification Opportunities for Compagnie Plastic and Scandinavian Tobacco
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compagnie and Scandinavian is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Compagnie Plastic 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 Compagnie Plastic Omnium are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Compagnie Plastic i.e., Compagnie Plastic and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Compagnie Plastic and Scandinavian Tobacco
Assuming the 90 days trading horizon Compagnie Plastic Omnium is expected to under-perform the Scandinavian Tobacco. In addition to that, Compagnie Plastic is 1.6 times more volatile than Scandinavian Tobacco Group. It trades about -0.01 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.01 per unit of volatility. If you would invest 10,911 in Scandinavian Tobacco Group on September 24, 2024 and sell it today you would lose (1,511) from holding Scandinavian Tobacco Group or give up 13.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Compagnie Plastic Omnium vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Compagnie Plastic Omnium |
| Scandinavian Tobacco |
Compagnie Plastic and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Plastic and Scandinavian Tobacco
The main advantage of trading using opposite Compagnie Plastic and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Compagnie Plastic vs. Hollywood Bowl Group | Compagnie Plastic vs. AcadeMedia AB | Compagnie Plastic vs. Porvair plc | Compagnie Plastic vs. LBG Media PLC |
| Scandinavian Tobacco vs. Zegona Communications Plc | Scandinavian Tobacco vs. Hochschild Mining plc | Scandinavian Tobacco vs. Griffin Mining | Scandinavian Tobacco vs. Datagroup SE |
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 the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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