Correlation Between DISTRICT METALS and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both DISTRICT METALS 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 DISTRICT METALS and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DISTRICT METALS and Scandinavian Tobacco Group, you can compare the effects of market volatilities on DISTRICT METALS 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 DISTRICT METALS with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and Scandinavian Tobacco.
Diversification Opportunities for DISTRICT METALS and Scandinavian Tobacco
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between DISTRICT and Scandinavian is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS i.e., DISTRICT METALS and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between DISTRICT METALS and Scandinavian Tobacco
Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 1.58 times more return on investment than Scandinavian Tobacco. However, DISTRICT METALS is 1.58 times more volatile than Scandinavian Tobacco Group. It trades about 0.08 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.06 per unit of risk. If you would invest 4.80 in DISTRICT METALS on September 15, 2024 and sell it today you would earn a total of 19.20 from holding DISTRICT METALS or generate 400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DISTRICT METALS vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| DISTRICT METALS |
| Scandinavian Tobacco |
DISTRICT METALS and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DISTRICT METALS and Scandinavian Tobacco
The main advantage of trading using opposite DISTRICT METALS and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS 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.| DISTRICT METALS vs. American Lithium Corp | DISTRICT METALS vs. ADRIATIC METALS LS 013355 | DISTRICT METALS vs. Superior Plus Corp | DISTRICT METALS vs. SIVERS SEMICONDUCTORS AB |
| Scandinavian Tobacco vs. DISTRICT METALS | Scandinavian Tobacco vs. CVS Health | Scandinavian Tobacco vs. PARKEN Sport Entertainment | Scandinavian Tobacco vs. Lion One Metals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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