Correlation Between Scandinavian Tobacco and Ubisoft Entertainment
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Ubisoft Entertainment 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 Ubisoft Entertainment 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 Ubisoft Entertainment SA, you can compare the effects of market volatilities on Scandinavian Tobacco and Ubisoft Entertainment 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 Ubisoft Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Ubisoft Entertainment.
Diversification Opportunities for Scandinavian Tobacco and Ubisoft Entertainment
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scandinavian and Ubisoft is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Ubisoft Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Ubisoft Entertainment go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Ubisoft Entertainment
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.69 times more return on investment than Ubisoft Entertainment. However, Scandinavian Tobacco is 1.69 times more volatile than Ubisoft Entertainment SA. It trades about 0.06 of its potential returns per unit of risk. Ubisoft Entertainment SA is currently generating about -0.03 per unit of risk. If you would invest 435.00 in Scandinavian Tobacco Group on September 3, 2024 and sell it today you would earn a total of 839.00 from holding Scandinavian Tobacco Group or generate 192.87% 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. Ubisoft Entertainment SA
Performance |
| Timeline |
| Scandinavian Tobacco |
| Ubisoft Entertainment |
Scandinavian Tobacco and Ubisoft Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Ubisoft Entertainment
The main advantage of trading using opposite Scandinavian Tobacco and Ubisoft Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Ubisoft Entertainment 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 Ubisoft Entertainment will offset losses from the drop in Ubisoft Entertainment's long position.| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Imperial Brands PLC |
| Ubisoft Entertainment vs. Nintendo Co | Ubisoft Entertainment vs. Nintendo Co | Ubisoft Entertainment vs. Sea Limited | Ubisoft Entertainment vs. Take Two Interactive Software |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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