Correlation Between Transport International and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Scandinavian Tobacco.
Diversification Opportunities for Transport International and Scandinavian Tobacco
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transport and Scandinavian is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Transport International and Scandinavian Tobacco
Assuming the 90 days horizon Transport International Holdings is expected to generate 0.93 times more return on investment than Scandinavian Tobacco. However, Transport International Holdings is 1.08 times less risky than Scandinavian Tobacco. It trades about 0.06 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.05 per unit of risk. If you would invest 44.00 in Transport International Holdings on October 30, 2024 and sell it today you would earn a total of 59.00 from holding Transport International Holdings or generate 134.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Transport International |
| Scandinavian Tobacco |
Transport International and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Scandinavian Tobacco
The main advantage of trading using opposite Transport International and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. The Yokohama Rubber | Transport International vs. Iridium Communications | Transport International vs. SANOK RUBBER ZY | Transport International vs. Rayonier Advanced Materials |
| Scandinavian Tobacco vs. Gaztransport Technigaz SA | Scandinavian Tobacco vs. Air Transport Services | Scandinavian Tobacco vs. Transport International Holdings | Scandinavian Tobacco vs. PLAYWAY SA ZY 10 |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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