Correlation Between Scandinavian Tobacco and Science Applications
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Science Applications 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 Science Applications 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 Science Applications International, you can compare the effects of market volatilities on Scandinavian Tobacco and Science Applications 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 Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Science Applications.
Diversification Opportunities for Scandinavian Tobacco and Science Applications
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scandinavian and Science is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Science Applications go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Science Applications
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.63 times more return on investment than Science Applications. However, Scandinavian Tobacco Group is 1.6 times less risky than Science Applications. It trades about -0.1 of its potential returns per unit of risk. Science Applications International is currently generating about -0.14 per unit of risk. If you would invest 1,372 in Scandinavian Tobacco Group on August 31, 2024 and sell it today you would lose (80.00) from holding Scandinavian Tobacco Group or give up 5.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Science Applications Internati
Performance |
| Timeline |
| Scandinavian Tobacco |
| Science Applications |
Scandinavian Tobacco and Science Applications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Science Applications
The main advantage of trading using opposite Scandinavian Tobacco and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Science Applications 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 Science Applications will offset losses from the drop in Science Applications' long position.The idea behind Scandinavian Tobacco Group and Science Applications International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Science Applications vs. Brockhaus Capital Management | Science Applications vs. STMICROELECTRONICS | Science Applications vs. Jupiter Fund Management | Science Applications vs. CEOTRONICS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |