Correlation Between Scandic Hotels and International Biotechnology
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and International Biotechnology 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 Scandic Hotels and International Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and International Biotechnology Trust, you can compare the effects of market volatilities on Scandic Hotels and International Biotechnology 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 Scandic Hotels with a short position of International Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and International Biotechnology.
Diversification Opportunities for Scandic Hotels and International Biotechnology
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Scandic and International is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and International Biotechnology go up and down completely randomly.
Pair Corralation between Scandic Hotels and International Biotechnology
Assuming the 90 days trading horizon Scandic Hotels is expected to generate 1.29 times less return on investment than International Biotechnology. In addition to that, Scandic Hotels is 1.33 times more volatile than International Biotechnology Trust. It trades about 0.05 of its total potential returns per unit of risk. International Biotechnology Trust is currently generating about 0.08 per unit of volatility. If you would invest 62,874 in International Biotechnology Trust on September 3, 2024 and sell it today you would earn a total of 8,126 from holding International Biotechnology Trust or generate 12.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandic Hotels Group vs. International Biotechnology Tr
Performance |
| Timeline |
| Scandic Hotels Group |
| International Biotechnology |
Scandic Hotels and International Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and International Biotechnology
The main advantage of trading using opposite Scandic Hotels and International Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, International Biotechnology 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 International Biotechnology will offset losses from the drop in International Biotechnology's long position.| Scandic Hotels vs. Sealed Air Corp | Scandic Hotels vs. Alaska Air Group | Scandic Hotels vs. Charter Communications Cl | Scandic Hotels vs. Zegona Communications Plc |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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