Correlation Between Scandinavian Tobacco and Alior Bank
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Alior Bank 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 Alior Bank 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 Alior Bank SA, you can compare the effects of market volatilities on Scandinavian Tobacco and Alior Bank 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 Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Alior Bank.
Diversification Opportunities for Scandinavian Tobacco and Alior Bank
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Alior is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Alior Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alior Bank SA 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 Alior Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alior Bank SA has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Alior Bank go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Alior Bank
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Alior Bank. In addition to that, Scandinavian Tobacco is 1.24 times more volatile than Alior Bank SA. It trades about -0.01 of its total potential returns per unit of risk. Alior Bank SA is currently generating about 0.01 per unit of volatility. If you would invest 7,946 in Alior Bank SA on September 14, 2024 and sell it today you would earn a total of 4.00 from holding Alior Bank SA or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Alior Bank SA
Performance |
| Timeline |
| Scandinavian Tobacco |
| Alior Bank SA |
Scandinavian Tobacco and Alior Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Alior Bank
The main advantage of trading using opposite Scandinavian Tobacco and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Alior Bank 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 Alior Bank will offset losses from the drop in Alior Bank's 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 |
| Alior Bank vs. Applied Materials | Alior Bank vs. Scandinavian Tobacco Group | Alior Bank vs. JB Hunt Transport | Alior Bank vs. Martin Marietta Materials |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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