Correlation Between Scandinavian Tobacco and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on Scandinavian Tobacco and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Aristocrat Leisure.
Diversification Opportunities for Scandinavian Tobacco and Aristocrat Leisure
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scandinavian and Aristocrat is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Aristocrat Leisure
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Aristocrat Leisure. In addition to that, Scandinavian Tobacco is 1.85 times more volatile than Aristocrat Leisure Limited. It trades about -0.05 of its total potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.42 per unit of volatility. If you would invest 3,640 in Aristocrat Leisure Limited on August 29, 2024 and sell it today you would earn a total of 480.00 from holding Aristocrat Leisure Limited or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| Scandinavian Tobacco |
| Aristocrat Leisure |
Scandinavian Tobacco and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Aristocrat Leisure
The main advantage of trading using opposite Scandinavian Tobacco and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Superior Plus Corp | Scandinavian Tobacco vs. NMI Holdings |
| Aristocrat Leisure vs. Sea Limited | Aristocrat Leisure vs. Superior Plus Corp | Aristocrat Leisure vs. NMI Holdings | Aristocrat Leisure vs. SIVERS SEMICONDUCTORS AB |
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.
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