Correlation Between Scandinavian Tobacco and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Morgan Advanced 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 Morgan Advanced 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 Morgan Advanced Materials, you can compare the effects of market volatilities on Scandinavian Tobacco and Morgan Advanced 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 Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Morgan Advanced.
Diversification Opportunities for Scandinavian Tobacco and Morgan Advanced
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Morgan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Morgan Advanced go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Morgan Advanced
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Morgan Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.09 times less risky than Morgan Advanced. The stock trades about -0.02 of its potential returns per unit of risk. The Morgan Advanced Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23,703 in Morgan Advanced Materials on September 14, 2024 and sell it today you would earn a total of 3,297 from holding Morgan Advanced Materials or generate 13.91% 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. Morgan Advanced Materials
Performance |
| Timeline |
| Scandinavian Tobacco |
| Morgan Advanced Materials |
Scandinavian Tobacco and Morgan Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Morgan Advanced
The main advantage of trading using opposite Scandinavian Tobacco and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.| Scandinavian Tobacco vs. Aurora Investment Trust | Scandinavian Tobacco vs. Blackrock World Mining | Scandinavian Tobacco vs. FC Investment Trust | Scandinavian Tobacco vs. METALL ZUG AG |
| Morgan Advanced vs. Polar Capital Technology | Morgan Advanced vs. National Beverage Corp | Morgan Advanced vs. Cognizant Technology Solutions | Morgan Advanced 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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