Correlation Between Advanced Medical and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Advanced Medical 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 Advanced Medical and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Medical Solutions and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Advanced Medical 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 Advanced Medical with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Scandinavian Tobacco.
Diversification Opportunities for Advanced Medical and Scandinavian Tobacco
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Scandinavian is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Advanced Medical 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 Advanced Medical Solutions 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 Advanced Medical i.e., Advanced Medical and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Advanced Medical and Scandinavian Tobacco
Assuming the 90 days trading horizon Advanced Medical Solutions is expected to under-perform the Scandinavian Tobacco. In addition to that, Advanced Medical is 1.78 times more volatile than Scandinavian Tobacco Group. It trades about -0.21 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.01 per unit of volatility. If you would invest 9,607 in Scandinavian Tobacco Group on October 11, 2024 and sell it today you would earn a total of 13.00 from holding Scandinavian Tobacco Group or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Medical Solutions vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Advanced Medical Sol |
| Scandinavian Tobacco |
Advanced Medical and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Medical and Scandinavian Tobacco
The main advantage of trading using opposite Advanced Medical and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical 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.| Advanced Medical vs. Universal Health Services | Advanced Medical vs. MediaZest plc | Advanced Medical vs. Live Nation Entertainment | Advanced Medical vs. Samsung Electronics Co |
| Scandinavian Tobacco vs. Advanced Medical Solutions | Scandinavian Tobacco vs. Abingdon Health Plc | Scandinavian Tobacco vs. Cardinal Health | Scandinavian Tobacco vs. Optima Health plc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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