Correlation Between Infinity Pharmaceuticals and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Infinity Pharmaceuticals 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 Infinity Pharmaceuticals and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infinity Pharmaceuticals and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Infinity Pharmaceuticals 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 Infinity Pharmaceuticals with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infinity Pharmaceuticals and Scandinavian Tobacco.
Diversification Opportunities for Infinity Pharmaceuticals and Scandinavian Tobacco
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Infinity and Scandinavian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Infinity Pharmaceuticals and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Infinity Pharmaceuticals 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 Infinity Pharmaceuticals 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 Infinity Pharmaceuticals i.e., Infinity Pharmaceuticals and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Infinity Pharmaceuticals and Scandinavian Tobacco
Assuming the 90 days horizon Infinity Pharmaceuticals is expected to generate 32.42 times more return on investment than Scandinavian Tobacco. However, Infinity Pharmaceuticals is 32.42 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 0.02 per unit of risk. If you would invest 0.33 in Infinity Pharmaceuticals on September 14, 2024 and sell it today you would lose (0.32) from holding Infinity Pharmaceuticals or give up 96.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Infinity Pharmaceuticals vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Infinity Pharmaceuticals |
| Scandinavian Tobacco |
Infinity Pharmaceuticals and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infinity Pharmaceuticals and Scandinavian Tobacco
The main advantage of trading using opposite Infinity Pharmaceuticals and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infinity Pharmaceuticals 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.The idea behind Infinity Pharmaceuticals and Scandinavian Tobacco Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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