Correlation Between Scandinavian Tobacco and 3I Group
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and 3I Group 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 3I Group 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 3I Group PLC, you can compare the effects of market volatilities on Scandinavian Tobacco and 3I Group 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 3I Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and 3I Group.
Diversification Opportunities for Scandinavian Tobacco and 3I Group
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scandinavian and III is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and 3I Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3I Group 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 3I Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3I Group PLC has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and 3I Group go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and 3I Group
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the 3I Group. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.18 times less risky than 3I Group. The stock trades about -0.28 of its potential returns per unit of risk. The 3I Group PLC is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 362,962 in 3I Group PLC on September 24, 2024 and sell it today you would lose (8,162) from holding 3I Group PLC or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. 3I Group PLC
Performance |
| Timeline |
| Scandinavian Tobacco |
| 3I Group PLC |
Scandinavian Tobacco and 3I Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and 3I Group
The main advantage of trading using opposite Scandinavian Tobacco and 3I Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, 3I Group 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 3I Group will offset losses from the drop in 3I Group's long position.| Scandinavian Tobacco vs. Zegona Communications Plc | Scandinavian Tobacco vs. Hochschild Mining plc | Scandinavian Tobacco vs. Griffin Mining | Scandinavian Tobacco vs. Datagroup SE |
| 3I Group vs. Darden Restaurants | 3I Group vs. New Residential Investment | 3I Group vs. Kinnevik Investment AB | 3I Group vs. Scandinavian Tobacco Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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