Correlation Between Scandinavian Tobacco and 70GD
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and 70GD 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 70GD 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 70GD, you can compare the effects of market volatilities on Scandinavian Tobacco and 70GD 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 70GD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and 70GD.
Diversification Opportunities for Scandinavian Tobacco and 70GD
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and 70GD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and 70GD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 70GD 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 70GD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 70GD has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and 70GD go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and 70GD
If you would invest 9,773 in Scandinavian Tobacco Group on November 8, 2024 and sell it today you would earn a total of 532.00 from holding Scandinavian Tobacco Group or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. 70GD
Performance |
| Timeline |
| Scandinavian Tobacco |
| 70GD |
Scandinavian Tobacco and 70GD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and 70GD
The main advantage of trading using opposite Scandinavian Tobacco and 70GD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, 70GD 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 70GD will offset losses from the drop in 70GD's long position.The idea behind Scandinavian Tobacco Group and 70GD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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