Correlation Between Cairn Homes and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Cairn Homes 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 Cairn Homes and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Scandic Hotels Group, you can compare the effects of market volatilities on Cairn Homes 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 Cairn Homes with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Scandic Hotels.
Diversification Opportunities for Cairn Homes and Scandic Hotels
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cairn and Scandic is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC 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 Cairn Homes 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 Cairn Homes PLC 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 Cairn Homes i.e., Cairn Homes and Scandic Hotels go up and down completely randomly.
Pair Corralation between Cairn Homes and Scandic Hotels
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.09 times more return on investment than Scandic Hotels. However, Cairn Homes is 1.09 times more volatile than Scandic Hotels Group. It trades about 0.09 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.05 per unit of risk. If you would invest 14,225 in Cairn Homes PLC on September 3, 2024 and sell it today you would earn a total of 2,875 from holding Cairn Homes PLC or generate 20.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Scandic Hotels Group
Performance |
| Timeline |
| Cairn Homes PLC |
| Scandic Hotels Group |
Cairn Homes and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Scandic Hotels
The main advantage of trading using opposite Cairn Homes and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes 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.| Cairn Homes vs. Rockfire Resources plc | Cairn Homes vs. Tlou Energy | Cairn Homes vs. Falcon Oil Gas | Cairn Homes vs. Helium One Global |
| Scandic Hotels vs. Sealed Air Corp | Scandic Hotels vs. Alaska Air Group | Scandic Hotels vs. Charter Communications Cl | Scandic Hotels vs. Zegona Communications 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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