Correlation Between Scandinavian Tobacco and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and JLEN Environmental 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 JLEN Environmental 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 JLEN Environmental Assets, you can compare the effects of market volatilities on Scandinavian Tobacco and JLEN Environmental 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and JLEN Environmental.
Diversification Opportunities for Scandinavian Tobacco and JLEN Environmental
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scandinavian and JLEN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and JLEN Environmental go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and JLEN Environmental
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the JLEN Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.62 times less risky than JLEN Environmental. The stock trades about -0.3 of its potential returns per unit of risk. The JLEN Environmental Assets is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 7,400 in JLEN Environmental Assets on September 26, 2024 and sell it today you would lose (320.00) from holding JLEN Environmental Assets or give up 4.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. JLEN Environmental Assets
Performance |
| Timeline |
| Scandinavian Tobacco |
| JLEN Environmental Assets |
Scandinavian Tobacco and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and JLEN Environmental
The main advantage of trading using opposite Scandinavian Tobacco and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| Scandinavian Tobacco vs. Uniper SE | Scandinavian Tobacco vs. Mulberry Group PLC | Scandinavian Tobacco vs. London Security Plc | Scandinavian Tobacco vs. Triad Group PLC |
| JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Hyundai Motor | JLEN Environmental 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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