Correlation Between Scandinavian Tobacco and CeoTronics
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and CeoTronics 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 CeoTronics 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 CeoTronics AG, you can compare the effects of market volatilities on Scandinavian Tobacco and CeoTronics 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 CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and CeoTronics.
Diversification Opportunities for Scandinavian Tobacco and CeoTronics
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Scandinavian and CeoTronics is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and CeoTronics go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and CeoTronics
Assuming the 90 days horizon Scandinavian Tobacco is expected to generate 2.27 times less return on investment than CeoTronics. But when comparing it to its historical volatility, Scandinavian Tobacco Group is 2.66 times less risky than CeoTronics. It trades about 0.35 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 605.00 in CeoTronics AG on November 27, 2024 and sell it today you would earn a total of 110.00 from holding CeoTronics AG or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. CeoTronics AG
Performance |
| Timeline |
| Scandinavian Tobacco |
| CeoTronics AG |
Scandinavian Tobacco and CeoTronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and CeoTronics
The main advantage of trading using opposite Scandinavian Tobacco and CeoTronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, CeoTronics 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 CeoTronics will offset losses from the drop in CeoTronics' long position.| Scandinavian Tobacco vs. DATANG INTL POW | Scandinavian Tobacco vs. Information Services International Dentsu | Scandinavian Tobacco vs. Alibaba Health Information | Scandinavian Tobacco vs. GEAR4MUSIC LS 10 |
| CeoTronics vs. LINMON MEDIA LTD | CeoTronics vs. LG Display Co | CeoTronics vs. ZINC MEDIA GR | CeoTronics vs. Iridium Communications |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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