Correlation Between GoldMining and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both GoldMining and Scandic Hotels 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 GoldMining and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Scandic Hotels Group, you can compare the effects of market volatilities on GoldMining and Scandic Hotels 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 GoldMining with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Scandic Hotels.
Diversification Opportunities for GoldMining and Scandic Hotels
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GoldMining and Scandic is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group and GoldMining 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 GoldMining are associated (or correlated) with Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of GoldMining i.e., GoldMining and Scandic Hotels go up and down completely randomly.
Pair Corralation between GoldMining and Scandic Hotels
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Scandic Hotels. In addition to that, GoldMining is 2.0 times more volatile than Scandic Hotels Group. It trades about -0.01 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.09 per unit of volatility. If you would invest 3,166 in Scandic Hotels Group on September 24, 2024 and sell it today you would earn a total of 3,514 from holding Scandic Hotels Group or generate 110.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 37.92% |
| Values | Daily Returns |
GoldMining vs. Scandic Hotels Group
Performance |
| Timeline |
| GoldMining |
| Scandic Hotels Group |
GoldMining and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Scandic Hotels
The main advantage of trading using opposite GoldMining and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| GoldMining vs. Uniper SE | GoldMining vs. Mulberry Group PLC | GoldMining vs. London Security Plc | GoldMining vs. Triad Group PLC |
| Scandic Hotels vs. Public Storage | Scandic Hotels vs. Foresight Environmental Infrastructure | Scandic Hotels vs. GlobalData PLC | Scandic Hotels vs. British American Tobacco |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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