Correlation Between PPHE HOTEL and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and Scandinavian Tobacco 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 PPHE HOTEL and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE HOTEL GROUP and Scandinavian Tobacco Group, you can compare the effects of market volatilities on PPHE HOTEL and Scandinavian Tobacco 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 PPHE HOTEL with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and Scandinavian Tobacco.
Diversification Opportunities for PPHE HOTEL and Scandinavian Tobacco
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PPHE and Scandinavian is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and PPHE HOTEL 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 PPHE HOTEL GROUP are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between PPHE HOTEL and Scandinavian Tobacco
Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to generate 1.51 times more return on investment than Scandinavian Tobacco. However, PPHE HOTEL is 1.51 times more volatile than Scandinavian Tobacco Group. It trades about 0.08 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.07 per unit of risk. If you would invest 1,420 in PPHE HOTEL GROUP on October 30, 2024 and sell it today you would earn a total of 90.00 from holding PPHE HOTEL GROUP or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| Scandinavian Tobacco |
PPHE HOTEL and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and Scandinavian Tobacco
The main advantage of trading using opposite PPHE HOTEL and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| PPHE HOTEL vs. Spirent Communications plc | PPHE HOTEL vs. Align Technology | PPHE HOTEL vs. Vishay Intertechnology | PPHE HOTEL vs. Micron Technology |
| Scandinavian Tobacco vs. Gaztransport Technigaz SA | Scandinavian Tobacco vs. Air Transport Services | Scandinavian Tobacco vs. Transport International Holdings | Scandinavian Tobacco vs. PLAYWAY SA ZY 10 |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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