Correlation Between CHIBA BANK and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both CHIBA BANK 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 CHIBA BANK and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHIBA BANK and Scandinavian Tobacco Group, you can compare the effects of market volatilities on CHIBA BANK 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 CHIBA BANK with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and Scandinavian Tobacco.
Diversification Opportunities for CHIBA BANK and Scandinavian Tobacco
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHIBA and Scandinavian is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and CHIBA BANK 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 CHIBA BANK 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 CHIBA BANK i.e., CHIBA BANK and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between CHIBA BANK and Scandinavian Tobacco
Assuming the 90 days trading horizon CHIBA BANK is expected to generate 0.8 times more return on investment than Scandinavian Tobacco. However, CHIBA BANK is 1.25 times less risky than Scandinavian Tobacco. It trades about 0.26 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.05 per unit of risk. If you would invest 660.00 in CHIBA BANK on August 29, 2024 and sell it today you would earn a total of 75.00 from holding CHIBA BANK or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHIBA BANK vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| CHIBA BANK |
| Scandinavian Tobacco |
CHIBA BANK and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHIBA BANK and Scandinavian Tobacco
The main advantage of trading using opposite CHIBA BANK and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA BANK 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.The idea behind CHIBA BANK and Scandinavian Tobacco Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Scandinavian Tobacco vs. QBE Insurance Group | Scandinavian Tobacco vs. XLMedia PLC | Scandinavian Tobacco vs. MSAD INSURANCE | Scandinavian Tobacco vs. REVO INSURANCE SPA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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