Correlation Between Scandinavian Tobacco and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and BORR DRILLING 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 BORR DRILLING 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 BORR DRILLING NEW, you can compare the effects of market volatilities on Scandinavian Tobacco and BORR DRILLING 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 BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and BORR DRILLING.
Diversification Opportunities for Scandinavian Tobacco and BORR DRILLING
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scandinavian and BORR is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and BORR DRILLING go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and BORR DRILLING
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the BORR DRILLING. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 2.36 times less risky than BORR DRILLING. The stock trades about -0.1 of its potential returns per unit of risk. The BORR DRILLING NEW is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 364.00 in BORR DRILLING NEW on September 20, 2024 and sell it today you would earn a total of 13.00 from holding BORR DRILLING NEW or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. BORR DRILLING NEW
Performance |
| Timeline |
| Scandinavian Tobacco |
| BORR DRILLING NEW |
Scandinavian Tobacco and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and BORR DRILLING
The main advantage of trading using opposite Scandinavian Tobacco and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| Scandinavian Tobacco vs. Regions Financial | Scandinavian Tobacco vs. PT Bank Maybank | Scandinavian Tobacco vs. CHIBA BANK | Scandinavian Tobacco vs. Tradegate AG Wertpapierhandelsbank |
| BORR DRILLING vs. KRISPY KREME DL 01 | BORR DRILLING vs. Quaker Chemical | BORR DRILLING vs. Universal Display | BORR DRILLING vs. Hemisphere Energy Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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