Correlation Between Coca Cola and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Scandinavian Tobacco.
Diversification Opportunities for Coca Cola and Scandinavian Tobacco
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coca and Scandinavian is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Coca Cola 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 The Coca Cola 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 Coca Cola i.e., Coca Cola and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Coca Cola and Scandinavian Tobacco
Allowing for the 90-day total investment horizon The Coca Cola is expected to generate 0.78 times more return on investment than Scandinavian Tobacco. However, The Coca Cola is 1.29 times less risky than Scandinavian Tobacco. It trades about 0.09 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.21 per unit of risk. If you would invest 6,272 in The Coca Cola on September 13, 2024 and sell it today you would earn a total of 101.50 from holding The Coca Cola or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Coca Cola vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Coca Cola |
| Scandinavian Tobacco |
Coca Cola and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Scandinavian Tobacco
The main advantage of trading using opposite Coca Cola and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |