Correlation Between Abrdn Property and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Abrdn Property 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 Abrdn Property and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between abrdn Property Income and Scandic Hotels Group, you can compare the effects of market volatilities on Abrdn Property 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 Abrdn Property with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Property and Scandic Hotels.
Diversification Opportunities for Abrdn Property and Scandic Hotels
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Abrdn and Scandic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Property Income 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 Abrdn Property 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 abrdn Property Income 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 Abrdn Property i.e., Abrdn Property and Scandic Hotels go up and down completely randomly.
Pair Corralation between Abrdn Property and Scandic Hotels
Assuming the 90 days trading horizon abrdn Property Income is expected to generate 31.66 times more return on investment than Scandic Hotels. However, Abrdn Property is 31.66 times more volatile than Scandic Hotels Group. It trades about 0.05 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.09 per unit of risk. If you would invest 4,629 in abrdn Property Income on September 12, 2024 and sell it today you would earn a total of 1,431 from holding abrdn Property Income or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
abrdn Property Income vs. Scandic Hotels Group
Performance |
| Timeline |
| abrdn Property Income |
| Scandic Hotels Group |
Abrdn Property and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abrdn Property and Scandic Hotels
The main advantage of trading using opposite Abrdn Property and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Property 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.| Abrdn Property vs. Scandic Hotels Group | Abrdn Property vs. Bytes Technology | Abrdn Property vs. Cognizant Technology Solutions | Abrdn Property vs. SMA Solar Technology |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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