Correlation Between Scandic Hotels and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on Scandic Hotels and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Premier Foods.
Diversification Opportunities for Scandic Hotels and Premier Foods
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scandic and Premier is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Premier Foods go up and down completely randomly.
Pair Corralation between Scandic Hotels and Premier Foods
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 1.39 times more return on investment than Premier Foods. However, Scandic Hotels is 1.39 times more volatile than Premier Foods PLC. It trades about 0.09 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.1 per unit of risk. If you would invest 3,298 in Scandic Hotels Group on September 2, 2024 and sell it today you would earn a total of 3,424 from holding Scandic Hotels Group or generate 103.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandic Hotels Group vs. Premier Foods PLC
Performance |
| Timeline |
| Scandic Hotels Group |
| Premier Foods PLC |
Scandic Hotels and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and Premier Foods
The main advantage of trading using opposite Scandic Hotels and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Scandic Hotels vs. Oakley Capital Investments | Scandic Hotels vs. United Internet AG | Scandic Hotels vs. Waste Management | Scandic Hotels vs. Young Cos Brewery |
| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Hyundai Motor | Premier Foods vs. Toyota Motor Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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