Correlation Between Scandinavian Tobacco and TELECOM PLUS
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and TELECOM PLUS 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 TELECOM PLUS 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 TELECOM PLUS PLC, you can compare the effects of market volatilities on Scandinavian Tobacco and TELECOM PLUS 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 TELECOM PLUS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and TELECOM PLUS.
Diversification Opportunities for Scandinavian Tobacco and TELECOM PLUS
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Scandinavian and TELECOM is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and TELECOM PLUS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM PLUS PLC 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 TELECOM PLUS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELECOM PLUS PLC has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and TELECOM PLUS go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and TELECOM PLUS
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the TELECOM PLUS. In addition to that, Scandinavian Tobacco is 1.04 times more volatile than TELECOM PLUS PLC. It trades about -0.13 of its total potential returns per unit of risk. TELECOM PLUS PLC is currently generating about 0.08 per unit of volatility. If you would invest 2,080 in TELECOM PLUS PLC on September 4, 2024 and sell it today you would earn a total of 80.00 from holding TELECOM PLUS PLC or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. TELECOM PLUS PLC
Performance |
| Timeline |
| Scandinavian Tobacco |
| TELECOM PLUS PLC |
Scandinavian Tobacco and TELECOM PLUS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and TELECOM PLUS
The main advantage of trading using opposite Scandinavian Tobacco and TELECOM PLUS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, TELECOM PLUS 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 TELECOM PLUS will offset losses from the drop in TELECOM PLUS's long position.| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Imperial Brands PLC |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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