Correlation Between CAP LEASE and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both CAP LEASE 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 CAP LEASE and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP LEASE AVIATION and Scandic Hotels Group, you can compare the effects of market volatilities on CAP LEASE 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 CAP LEASE with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and Scandic Hotels.
Diversification Opportunities for CAP LEASE and Scandic Hotels
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CAP and Scandic is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION 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 CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and Scandic Hotels go up and down completely randomly.
Pair Corralation between CAP LEASE and Scandic Hotels
Assuming the 90 days trading horizon CAP LEASE is expected to generate 1.06 times less return on investment than Scandic Hotels. But when comparing it to its historical volatility, CAP LEASE AVIATION is 1.57 times less risky than Scandic Hotels. It trades about 0.23 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,534 in Scandic Hotels Group on October 1, 2024 and sell it today you would earn a total of 281.00 from holding Scandic Hotels Group or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAP LEASE AVIATION vs. Scandic Hotels Group
Performance |
| Timeline |
| CAP LEASE AVIATION |
| Scandic Hotels Group |
CAP LEASE and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAP LEASE and Scandic Hotels
The main advantage of trading using opposite CAP LEASE and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE 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.| CAP LEASE vs. Albion Technology General | CAP LEASE vs. DXC Technology Co | CAP LEASE vs. Addtech | CAP LEASE vs. Playtech Plc |
| Scandic Hotels vs. Uniper SE | Scandic Hotels vs. Mulberry Group PLC | Scandic Hotels vs. London Security Plc | Scandic Hotels vs. Triad Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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