Correlation Between Associated British and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Associated British and Scandic Hotels 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 Associated British and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Scandic Hotels Group, you can compare the effects of market volatilities on Associated British and Scandic Hotels 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 Associated British with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Scandic Hotels.
Diversification Opportunities for Associated British and Scandic Hotels
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Associated and Scandic is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group and Associated British 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 Associated British Foods are associated (or correlated) with Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Associated British i.e., Associated British and Scandic Hotels go up and down completely randomly.
Pair Corralation between Associated British and Scandic Hotels
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Scandic Hotels. In addition to that, Associated British is 1.36 times more volatile than Scandic Hotels Group. It trades about -0.14 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about -0.16 per unit of volatility. If you would invest 6,943 in Scandic Hotels Group on September 2, 2024 and sell it today you would lose (221.00) from holding Scandic Hotels Group or give up 3.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Scandic Hotels Group
Performance |
| Timeline |
| Associated British Foods |
| Scandic Hotels Group |
Associated British and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Scandic Hotels
The main advantage of trading using opposite Associated British and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Associated British vs. Vitec Software Group | Associated British vs. Kinnevik Investment AB | Associated British vs. Kaufman Et Broad | Associated British vs. Tatton Asset Management |
| Scandic Hotels vs. Oakley Capital Investments | Scandic Hotels vs. United Internet AG | Scandic Hotels vs. Waste Management | Scandic Hotels vs. Young Cos Brewery |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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