Correlation Between Scandinavian Tobacco and ÜSTRA Hannoversche
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and ÜSTRA Hannoversche 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 ÜSTRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe, you can compare the effects of market volatilities on Scandinavian Tobacco and ÜSTRA Hannoversche 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 ÜSTRA Hannoversche. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and ÜSTRA Hannoversche.
Diversification Opportunities for Scandinavian Tobacco and ÜSTRA Hannoversche
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scandinavian and ÜSTRA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and STRA Hannoversche Verkehrsbetr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ÜSTRA Hannoversche 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 ÜSTRA Hannoversche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ÜSTRA Hannoversche has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and ÜSTRA Hannoversche go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and ÜSTRA Hannoversche
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.74 times more return on investment than ÜSTRA Hannoversche. However, Scandinavian Tobacco is 1.74 times more volatile than STRA Hannoversche Verkehrsbetriebe. It trades about 0.05 of its potential returns per unit of risk. STRA Hannoversche Verkehrsbetriebe is currently generating about -0.02 per unit of risk. If you would invest 793.00 in Scandinavian Tobacco Group on September 2, 2024 and sell it today you would earn a total of 481.00 from holding Scandinavian Tobacco Group or generate 60.66% 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. STRA Hannoversche Verkehrsbetr
Performance |
| Timeline |
| Scandinavian Tobacco |
| ÜSTRA Hannoversche |
Scandinavian Tobacco and ÜSTRA Hannoversche Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and ÜSTRA Hannoversche
The main advantage of trading using opposite Scandinavian Tobacco and ÜSTRA Hannoversche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, ÜSTRA Hannoversche 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 ÜSTRA Hannoversche will offset losses from the drop in ÜSTRA Hannoversche's long position.| Scandinavian Tobacco vs. Compugroup Medical SE | Scandinavian Tobacco vs. SAFETY MEDICAL PROD | Scandinavian Tobacco vs. IMAGIN MEDICAL INC | Scandinavian Tobacco vs. TYSON FOODS A |
| ÜSTRA Hannoversche vs. SCANDMEDICAL SOLDK 040 | ÜSTRA Hannoversche vs. MGIC INVESTMENT | ÜSTRA Hannoversche vs. HK Electric Investments | ÜSTRA Hannoversche vs. MEDICAL FACILITIES NEW |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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