Correlation Between Scandinavian Tobacco and Greenroc Mining
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Greenroc Mining 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 Greenroc Mining 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 Greenroc Mining PLC, you can compare the effects of market volatilities on Scandinavian Tobacco and Greenroc Mining 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 Greenroc Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Greenroc Mining.
Diversification Opportunities for Scandinavian Tobacco and Greenroc Mining
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Greenroc is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Greenroc Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenroc Mining PLC 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 Greenroc Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenroc Mining PLC has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Greenroc Mining go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Greenroc Mining
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Greenroc Mining. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 2.95 times less risky than Greenroc Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Greenroc Mining PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Greenroc Mining PLC on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Greenroc Mining PLC or generate 6.67% 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. Greenroc Mining PLC
Performance |
| Timeline |
| Scandinavian Tobacco |
| Greenroc Mining PLC |
Scandinavian Tobacco and Greenroc Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Greenroc Mining
The main advantage of trading using opposite Scandinavian Tobacco and Greenroc Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Greenroc Mining 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 Greenroc Mining will offset losses from the drop in Greenroc Mining's long position.| Scandinavian Tobacco vs. Neometals | Scandinavian Tobacco vs. Coor Service Management | Scandinavian Tobacco vs. Aeorema Communications Plc | Scandinavian Tobacco vs. JLEN Environmental Assets |
| Greenroc Mining vs. One Media iP | Greenroc Mining vs. Zoom Video Communications | Greenroc Mining vs. Hollywood Bowl Group | Greenroc Mining vs. Aeorema Communications Plc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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