Correlation Between Scandinavian Tobacco and Air Products
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Air Products 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 Scandinavian Tobacco and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Air Products Chemicals, you can compare the effects of market volatilities on Scandinavian Tobacco and Air Products 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 Scandinavian Tobacco with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Air Products.
Diversification Opportunities for Scandinavian Tobacco and Air Products
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Air is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Air Products go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Air Products
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 0.85 times more return on investment than Air Products. However, Scandinavian Tobacco Group is 1.17 times less risky than Air Products. It trades about 0.11 of its potential returns per unit of risk. Air Products Chemicals is currently generating about -0.01 per unit of risk. If you would invest 9,545 in Scandinavian Tobacco Group on September 14, 2024 and sell it today you would earn a total of 210.00 from holding Scandinavian Tobacco Group or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Air Products Chemicals
Performance |
| Timeline |
| Scandinavian Tobacco |
| Air Products Chemicals |
Scandinavian Tobacco and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Air Products
The main advantage of trading using opposite Scandinavian Tobacco and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Scandinavian Tobacco vs. Aurora Investment Trust | Scandinavian Tobacco vs. Blackrock World Mining | Scandinavian Tobacco vs. FC Investment Trust | Scandinavian Tobacco vs. METALL ZUG AG |
| Air Products vs. Made Tech Group | Air Products vs. Datalogic | Air Products vs. Allianz Technology Trust | Air Products vs. Extra Space Storage |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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