Correlation Between Scandic Hotels and Reliance Industries
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Reliance Industries 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 Reliance Industries 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 Reliance Industries Ltd, you can compare the effects of market volatilities on Scandic Hotels and Reliance Industries 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 Reliance Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Reliance Industries.
Diversification Opportunities for Scandic Hotels and Reliance Industries
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandic and Reliance is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Reliance Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Industries 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 Reliance Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Industries has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Reliance Industries go up and down completely randomly.
Pair Corralation between Scandic Hotels and Reliance Industries
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 0.92 times more return on investment than Reliance Industries. However, Scandic Hotels Group is 1.09 times less risky than Reliance Industries. It trades about 0.02 of its potential returns per unit of risk. Reliance Industries Ltd is currently generating about -0.17 per unit of risk. If you would invest 6,722 in Scandic Hotels Group on August 28, 2024 and sell it today you would earn a total of 56.00 from holding Scandic Hotels Group or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandic Hotels Group vs. Reliance Industries Ltd
Performance |
| Timeline |
| Scandic Hotels Group |
| Reliance Industries |
Scandic Hotels and Reliance Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and Reliance Industries
The main advantage of trading using opposite Scandic Hotels and Reliance Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, Reliance Industries 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 Reliance Industries will offset losses from the drop in Reliance Industries' long position.| Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Hyundai Motor | Scandic Hotels vs. Toyota Motor Corp |
| Reliance Industries vs. Playtech Plc | Reliance Industries vs. The Investment | Reliance Industries vs. Auto Trader Group | Reliance Industries vs. Samsung Electronics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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