Correlation Between Scandinavian Tobacco and Lords Grp
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Lords Grp 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 Lords Grp 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 Lords Grp Trading, you can compare the effects of market volatilities on Scandinavian Tobacco and Lords Grp 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 Lords Grp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Lords Grp.
Diversification Opportunities for Scandinavian Tobacco and Lords Grp
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scandinavian and Lords is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Lords Grp Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lords Grp Trading 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 Lords Grp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lords Grp Trading has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Lords Grp go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Lords Grp
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 1.54 times more return on investment than Lords Grp. However, Scandinavian Tobacco is 1.54 times more volatile than Lords Grp Trading. It trades about -0.19 of its potential returns per unit of risk. Lords Grp Trading is currently generating about -0.4 per unit of risk. If you would invest 10,480 in Scandinavian Tobacco Group on September 12, 2024 and sell it today you would lose (860.00) from holding Scandinavian Tobacco Group or give up 8.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Lords Grp Trading
Performance |
| Timeline |
| Scandinavian Tobacco |
| Lords Grp Trading |
Scandinavian Tobacco and Lords Grp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Lords Grp
The main advantage of trading using opposite Scandinavian Tobacco and Lords Grp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Lords Grp 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 Lords Grp will offset losses from the drop in Lords Grp's long position.| Scandinavian Tobacco vs. Hong Kong Land | Scandinavian Tobacco vs. Neometals | Scandinavian Tobacco vs. Coor Service Management | Scandinavian Tobacco vs. Fidelity Sustainable USD |
| Lords Grp vs. Hong Kong Land | Lords Grp vs. Neometals | Lords Grp vs. Coor Service Management | Lords Grp vs. Fidelity Sustainable USD |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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