Correlation Between Ferrexpo PLC and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC 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 Ferrexpo PLC and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Scandic Hotels Group, you can compare the effects of market volatilities on Ferrexpo PLC 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 Ferrexpo PLC with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Scandic Hotels.
Diversification Opportunities for Ferrexpo PLC and Scandic Hotels
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ferrexpo and Scandic is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo 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 Ferrexpo PLC 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 Ferrexpo 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 Ferrexpo PLC i.e., Ferrexpo PLC and Scandic Hotels go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Scandic Hotels
Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 2.99 times more return on investment than Scandic Hotels. However, Ferrexpo PLC is 2.99 times more volatile than Scandic Hotels Group. It trades about 0.05 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.1 per unit of risk. If you would invest 6,970 in Ferrexpo PLC on September 4, 2024 and sell it today you would earn a total of 2,810 from holding Ferrexpo PLC or generate 40.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrexpo PLC vs. Scandic Hotels Group
Performance |
| Timeline |
| Ferrexpo PLC |
| Scandic Hotels Group |
Ferrexpo PLC and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Scandic Hotels
The main advantage of trading using opposite Ferrexpo PLC and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC 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.| Ferrexpo PLC vs. Scandic Hotels Group | Ferrexpo PLC vs. Creo Medical Group | Ferrexpo PLC vs. Advanced Medical Solutions | Ferrexpo PLC vs. Panther Metals PLC |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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