Correlation Between Chengdu PUTIAN and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Chengdu PUTIAN 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 Chengdu PUTIAN and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chengdu PUTIAN Telecommunications and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Chengdu PUTIAN 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 Chengdu PUTIAN with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu PUTIAN and Scandinavian Tobacco.
Diversification Opportunities for Chengdu PUTIAN and Scandinavian Tobacco
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Scandinavian is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu PUTIAN Telecommunicati and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Chengdu PUTIAN 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 Chengdu PUTIAN Telecommunications 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 Chengdu PUTIAN i.e., Chengdu PUTIAN and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Chengdu PUTIAN and Scandinavian Tobacco
Assuming the 90 days trading horizon Chengdu PUTIAN is expected to generate 1.63 times less return on investment than Scandinavian Tobacco. In addition to that, Chengdu PUTIAN is 1.33 times more volatile than Scandinavian Tobacco Group. It trades about 0.03 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.06 per unit of volatility. If you would invest 476.00 in Scandinavian Tobacco Group on November 1, 2024 and sell it today you would earn a total of 882.00 from holding Scandinavian Tobacco Group or generate 185.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu PUTIAN Telecommunicati vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Chengdu PUTIAN Telec |
| Scandinavian Tobacco |
Chengdu PUTIAN and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu PUTIAN and Scandinavian Tobacco
The main advantage of trading using opposite Chengdu PUTIAN and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu PUTIAN 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.| Chengdu PUTIAN vs. PRECISION DRILLING P | Chengdu PUTIAN vs. ATOSS SOFTWARE | Chengdu PUTIAN vs. UPDATE SOFTWARE | Chengdu PUTIAN vs. BORR DRILLING NEW |
| Scandinavian Tobacco vs. Mitsubishi Materials | Scandinavian Tobacco vs. CONTAGIOUS GAMING INC | Scandinavian Tobacco vs. Games Workshop Group | Scandinavian Tobacco vs. Summit Materials |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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