Correlation Between Scandinavian Tobacco and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on Scandinavian Tobacco and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Quaker Chemical.
Diversification Opportunities for Scandinavian Tobacco and Quaker Chemical
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Quaker is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Quaker Chemical go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Quaker Chemical
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.72 times more return on investment than Quaker Chemical. However, Scandinavian Tobacco is 1.72 times more volatile than Quaker Chemical. It trades about -0.11 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.27 per unit of risk. If you would invest 1,366 in Scandinavian Tobacco Group on September 13, 2024 and sell it today you would lose (96.00) from holding Scandinavian Tobacco Group or give up 7.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Quaker Chemical
Performance |
| Timeline |
| Scandinavian Tobacco |
| Quaker Chemical |
Scandinavian Tobacco and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Quaker Chemical
The main advantage of trading using opposite Scandinavian Tobacco and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Scandinavian Tobacco vs. HomeToGo SE | Scandinavian Tobacco vs. Gruppo Mutuionline SpA | Scandinavian Tobacco vs. SIEM OFFSHORE NEW | Scandinavian Tobacco vs. Taylor Morrison Home |
| Quaker Chemical vs. ScanSource | Quaker Chemical vs. BlueScope Steel Limited | Quaker Chemical vs. KRAKATAU STEEL B | Quaker Chemical vs. Khiron Life Sciences |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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