Correlation Between Scandinavian Tobacco and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on Scandinavian Tobacco and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Compagnie Plastic.
Diversification Opportunities for Scandinavian Tobacco and Compagnie Plastic
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Compagnie is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Compagnie Plastic
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 0.63 times more return on investment than Compagnie Plastic. However, Scandinavian Tobacco Group is 1.6 times less risky than Compagnie Plastic. It trades about -0.01 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.01 per unit of risk. If you would invest 10,911 in Scandinavian Tobacco Group on September 24, 2024 and sell it today you would lose (1,511) from holding Scandinavian Tobacco Group or give up 13.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Scandinavian Tobacco Group vs. Compagnie Plastic Omnium
Performance |
Timeline |
Scandinavian Tobacco |
Compagnie Plastic Omnium |
Scandinavian Tobacco and Compagnie Plastic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scandinavian Tobacco and Compagnie Plastic
The main advantage of trading using opposite Scandinavian Tobacco and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.Scandinavian Tobacco vs. Zegona Communications Plc | Scandinavian Tobacco vs. Hochschild Mining plc | Scandinavian Tobacco vs. Griffin Mining | Scandinavian Tobacco vs. Datagroup SE |
Compagnie Plastic vs. Hollywood Bowl Group | Compagnie Plastic vs. AcadeMedia AB | Compagnie Plastic vs. Porvair plc | Compagnie Plastic vs. LBG Media 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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