Correlation Between Scandinavian Tobacco and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on Scandinavian Tobacco and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Fast Retailing.
Diversification Opportunities for Scandinavian Tobacco and Fast Retailing
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Fast is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Fast Retailing go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Fast Retailing
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.58 times more return on investment than Fast Retailing. However, Scandinavian Tobacco Group is 1.71 times less risky than Fast Retailing. It trades about 0.25 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.16 per unit of risk. If you would invest 1,242 in Scandinavian Tobacco Group on October 23, 2024 and sell it today you would earn a total of 76.00 from holding Scandinavian Tobacco Group or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Fast Retailing Co
Performance |
| Timeline |
| Scandinavian Tobacco |
| Fast Retailing |
Scandinavian Tobacco and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Fast Retailing
The main advantage of trading using opposite Scandinavian Tobacco and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Scandinavian Tobacco vs. Tradeweb Markets | Scandinavian Tobacco vs. United Rentals | Scandinavian Tobacco vs. TRADELINK ELECTRON | Scandinavian Tobacco vs. GRENKELEASING Dusseldorf |
| Fast Retailing vs. Air Lease | Fast Retailing vs. Pentair plc | Fast Retailing vs. United Rentals | Fast Retailing vs. Lendlease Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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