Correlation Between Scandinavian Tobacco and Futura Medical
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Futura Medical 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 Futura Medical 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 Futura Medical, you can compare the effects of market volatilities on Scandinavian Tobacco and Futura Medical 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 Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Futura Medical.
Diversification Opportunities for Scandinavian Tobacco and Futura Medical
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scandinavian and Futura is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Futura Medical go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Futura Medical
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 1.12 times more return on investment than Futura Medical. However, Scandinavian Tobacco is 1.12 times more volatile than Futura Medical. It trades about -0.08 of its potential returns per unit of risk. Futura Medical is currently generating about -0.16 per unit of risk. If you would invest 10,260 in Scandinavian Tobacco Group on August 30, 2024 and sell it today you would lose (385.00) from holding Scandinavian Tobacco Group or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Futura Medical
Performance |
| Timeline |
| Scandinavian Tobacco |
| Futura Medical |
Scandinavian Tobacco and Futura Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Futura Medical
The main advantage of trading using opposite Scandinavian Tobacco and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical's long position.| Scandinavian Tobacco vs. Verizon Communications | Scandinavian Tobacco vs. Brunner Investment Trust | Scandinavian Tobacco vs. Gaztransport et Technigaz | Scandinavian Tobacco vs. Zegona Communications Plc |
| Futura Medical vs. Samsung Electronics Co | Futura Medical vs. Samsung Electronics Co | Futura Medical vs. Hyundai Motor | Futura Medical vs. Toyota Motor Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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