Correlation Between Gamma Communications and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications PLC and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Scandinavian Tobacco.
Diversification Opportunities for Gamma Communications and Scandinavian Tobacco
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gamma and Scandinavian is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Gamma Communications 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 Gamma Communications PLC 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 Gamma Communications i.e., Gamma Communications and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Gamma Communications and Scandinavian Tobacco
Assuming the 90 days trading horizon Gamma Communications PLC is expected to generate 1.56 times more return on investment than Scandinavian Tobacco. However, Gamma Communications is 1.56 times more volatile than Scandinavian Tobacco Group. It trades about 0.07 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.09 per unit of risk. If you would invest 149,628 in Gamma Communications PLC on August 31, 2024 and sell it today you would earn a total of 11,972 from holding Gamma Communications PLC or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications PLC vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Gamma Communications PLC |
| Scandinavian Tobacco |
Gamma Communications and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Scandinavian Tobacco
The main advantage of trading using opposite Gamma Communications and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. Toyota Motor Corp | Gamma Communications vs. SoftBank Group Corp | Gamma Communications vs. OTP Bank Nyrt | Gamma Communications vs. Las Vegas Sands |
| Scandinavian Tobacco vs. Neometals | Scandinavian Tobacco vs. Coor Service Management | Scandinavian Tobacco vs. Aeorema Communications Plc | Scandinavian Tobacco vs. JLEN Environmental Assets |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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