Correlation Between Scandinavian Tobacco and RELO GROUP
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and RELO GROUP 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 RELO GROUP 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 RELO GROUP INC, you can compare the effects of market volatilities on Scandinavian Tobacco and RELO GROUP 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 RELO GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and RELO GROUP.
Diversification Opportunities for Scandinavian Tobacco and RELO GROUP
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scandinavian and RELO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and RELO GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELO GROUP INC 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 RELO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELO GROUP INC has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and RELO GROUP go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and RELO GROUP
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the RELO GROUP. In addition to that, Scandinavian Tobacco is 1.06 times more volatile than RELO GROUP INC. It trades about -0.09 of its total potential returns per unit of risk. RELO GROUP INC is currently generating about -0.02 per unit of volatility. If you would invest 1,110 in RELO GROUP INC on September 1, 2024 and sell it today you would lose (20.00) from holding RELO GROUP INC or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. RELO GROUP INC
Performance |
| Timeline |
| Scandinavian Tobacco |
| RELO GROUP INC |
Scandinavian Tobacco and RELO GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and RELO GROUP
The main advantage of trading using opposite Scandinavian Tobacco and RELO GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, RELO GROUP 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 RELO GROUP will offset losses from the drop in RELO GROUP's long position.| Scandinavian Tobacco vs. Darden Restaurants | Scandinavian Tobacco vs. Hanison Construction Holdings | Scandinavian Tobacco vs. NorAm Drilling AS | Scandinavian Tobacco vs. BORR DRILLING NEW |
| RELO GROUP vs. Iridium Communications | RELO GROUP vs. COMBA TELECOM SYST | RELO GROUP vs. Perseus Mining Limited | RELO GROUP vs. GRIFFIN MINING LTD |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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