Correlation Between Scandinavian Tobacco and Everyman Media
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Everyman Media 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 Everyman Media 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 Everyman Media Group, you can compare the effects of market volatilities on Scandinavian Tobacco and Everyman Media 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 Everyman Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Everyman Media.
Diversification Opportunities for Scandinavian Tobacco and Everyman Media
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Everyman is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Everyman Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyman Media 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 Everyman Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyman Media Group has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Everyman Media go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Everyman Media
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 0.35 times more return on investment than Everyman Media. However, Scandinavian Tobacco Group is 2.83 times less risky than Everyman Media. It trades about 0.25 of its potential returns per unit of risk. Everyman Media Group is currently generating about -0.32 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. Everyman Media Group
Performance |
| Timeline |
| Scandinavian Tobacco |
| Everyman Media Group |
Scandinavian Tobacco and Everyman Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Everyman Media
The main advantage of trading using opposite Scandinavian Tobacco and Everyman Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Everyman Media 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 Everyman Media will offset losses from the drop in Everyman Media's long position.The idea behind Scandinavian Tobacco Group and Everyman Media 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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