Correlation Between Prosiebensat and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Prosiebensat and Scandic Hotels 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 Prosiebensat and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosiebensat 1 Media and Scandic Hotels Group, you can compare the effects of market volatilities on Prosiebensat and Scandic Hotels 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 Prosiebensat with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Scandic Hotels.
Diversification Opportunities for Prosiebensat and Scandic Hotels
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prosiebensat and Scandic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group and Prosiebensat 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 Prosiebensat 1 Media are associated (or correlated) with Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Prosiebensat i.e., Prosiebensat and Scandic Hotels go up and down completely randomly.
Pair Corralation between Prosiebensat and Scandic Hotels
Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the Scandic Hotels. In addition to that, Prosiebensat is 2.32 times more volatile than Scandic Hotels Group. It trades about -0.02 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about -0.03 per unit of volatility. If you would invest 6,798 in Scandic Hotels Group on October 11, 2024 and sell it today you would lose (158.00) from holding Scandic Hotels Group or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosiebensat 1 Media vs. Scandic Hotels Group
Performance |
| Timeline |
| Prosiebensat 1 Media |
| Scandic Hotels Group |
Prosiebensat and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosiebensat and Scandic Hotels
The main advantage of trading using opposite Prosiebensat and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Prosiebensat vs. Auction Technology Group | Prosiebensat vs. Waste Management | Prosiebensat vs. Liontrust Asset Management | Prosiebensat vs. Vienna Insurance Group |
| Scandic Hotels vs. Empire Metals Limited | Scandic Hotels vs. Various Eateries PLC | Scandic Hotels vs. Morgan Advanced Materials | Scandic Hotels vs. Vulcan Materials Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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