Correlation Between Scandinavian Tobacco and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Altair Engineering 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 Altair Engineering 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 Altair Engineering, you can compare the effects of market volatilities on Scandinavian Tobacco and Altair Engineering 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 Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Altair Engineering.
Diversification Opportunities for Scandinavian Tobacco and Altair Engineering
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scandinavian and Altair is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering 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 Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Altair Engineering go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Altair Engineering
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.77 times more return on investment than Altair Engineering. However, Scandinavian Tobacco is 1.77 times more volatile than Altair Engineering. It trades about 0.32 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.08 per unit of risk. If you would invest 1,366 in Scandinavian Tobacco Group on December 1, 2024 and sell it today you would earn a total of 94.00 from holding Scandinavian Tobacco Group or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Altair Engineering
Performance |
| Timeline |
| Scandinavian Tobacco |
| Altair Engineering |
Scandinavian Tobacco and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Altair Engineering
The main advantage of trading using opposite Scandinavian Tobacco and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Altair Engineering 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 Altair Engineering will offset losses from the drop in Altair Engineering's long position.| Scandinavian Tobacco vs. EAGLE MATERIALS | Scandinavian Tobacco vs. CHINA SOUTHN AIR H | Scandinavian Tobacco vs. Martin Marietta Materials | Scandinavian Tobacco vs. QLEANAIR AB SK 50 |
| Altair Engineering vs. GOLDQUEST MINING | Altair Engineering vs. Tower Semiconductor | Altair Engineering vs. Motorcar Parts of | Altair Engineering vs. NXP Semiconductors NV |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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