Correlation Between Alefarm Brewing and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Alefarm Brewing 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 Alefarm Brewing and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alefarm Brewing AS and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Alefarm Brewing 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 Alefarm Brewing with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alefarm Brewing and Scandinavian Tobacco.
Diversification Opportunities for Alefarm Brewing and Scandinavian Tobacco
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alefarm and Scandinavian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alefarm Brewing AS and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Alefarm Brewing 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 Alefarm Brewing AS 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 Alefarm Brewing i.e., Alefarm Brewing and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Alefarm Brewing and Scandinavian Tobacco
Assuming the 90 days trading horizon Alefarm Brewing AS is expected to generate 2.9 times more return on investment than Scandinavian Tobacco. However, Alefarm Brewing is 2.9 times more volatile than Scandinavian Tobacco Group. It trades about 0.03 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.01 per unit of risk. If you would invest 135.00 in Alefarm Brewing AS on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Alefarm Brewing AS or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alefarm Brewing AS vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Alefarm Brewing AS |
| Scandinavian Tobacco |
Alefarm Brewing and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alefarm Brewing and Scandinavian Tobacco
The main advantage of trading using opposite Alefarm Brewing and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alefarm Brewing 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.| Alefarm Brewing vs. Prime Office AS | Alefarm Brewing vs. Jyske Bank AS | Alefarm Brewing vs. Danske Andelskassers Bank | Alefarm Brewing vs. PARKEN Sport Entertainment |
| Scandinavian Tobacco vs. Matas AS | Scandinavian Tobacco vs. Tryg AS | Scandinavian Tobacco vs. Alm Brand | Scandinavian Tobacco vs. Royal Unibrew AS |
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 CEOs Directory module to screen CEOs from public companies around the world.
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