Correlation Between Aristocrat Leisure and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Scandinavian Tobacco 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 Aristocrat Leisure and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Aristocrat Leisure and Scandinavian Tobacco 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 Aristocrat Leisure with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Scandinavian Tobacco.
Diversification Opportunities for Aristocrat Leisure and Scandinavian Tobacco
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aristocrat and Scandinavian is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Scandinavian Tobacco
Assuming the 90 days horizon Aristocrat Leisure is expected to generate 2.05 times less return on investment than Scandinavian Tobacco. But when comparing it to its historical volatility, Aristocrat Leisure Limited is 3.12 times less risky than Scandinavian Tobacco. It trades about 0.08 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 468.00 in Scandinavian Tobacco Group on August 26, 2024 and sell it today you would earn a total of 812.00 from holding Scandinavian Tobacco Group or generate 173.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Aristocrat Leisure |
| Scandinavian Tobacco |
Aristocrat Leisure and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Scandinavian Tobacco
The main advantage of trading using opposite Aristocrat Leisure and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Aristocrat Leisure vs. Scandinavian Tobacco Group | Aristocrat Leisure vs. Verizon Communications | Aristocrat Leisure vs. COMPUTERSHARE | Aristocrat Leisure vs. HEMISPHERE EGY |
| Scandinavian Tobacco vs. TFS FINANCIAL | Scandinavian Tobacco vs. PT Bank Maybank | Scandinavian Tobacco vs. CHIBA BANK | Scandinavian Tobacco vs. Kaiser Aluminum |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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