Correlation Between Scandinavian Tobacco and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on Scandinavian Tobacco and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Hollywood Bowl.
Diversification Opportunities for Scandinavian Tobacco and Hollywood Bowl
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Hollywood is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Hollywood Bowl
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 0.4 times more return on investment than Hollywood Bowl. However, Scandinavian Tobacco Group is 2.52 times less risky than Hollywood Bowl. It trades about 0.25 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about -0.15 per unit of risk. If you would invest 9,450 in Scandinavian Tobacco Group on November 4, 2024 and sell it today you would earn a total of 895.00 from holding Scandinavian Tobacco Group or generate 9.47% 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. Hollywood Bowl Group
Performance |
| Timeline |
| Scandinavian Tobacco |
| Hollywood Bowl Group |
Scandinavian Tobacco and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Hollywood Bowl
The main advantage of trading using opposite Scandinavian Tobacco and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.The idea behind Scandinavian Tobacco Group and Hollywood Bowl Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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