Correlation Between Litigation Capital and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Scandinavian Tobacco.
Diversification Opportunities for Litigation Capital and Scandinavian Tobacco
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Litigation and Scandinavian is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Litigation Capital 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 Litigation Capital Management 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 Litigation Capital i.e., Litigation Capital and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Litigation Capital and Scandinavian Tobacco
Assuming the 90 days trading horizon Litigation Capital Management is expected to generate 0.43 times more return on investment than Scandinavian Tobacco. However, Litigation Capital Management is 2.35 times less risky than Scandinavian Tobacco. It trades about 0.27 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.08 per unit of risk. If you would invest 11,050 in Litigation Capital Management on August 30, 2024 and sell it today you would earn a total of 525.00 from holding Litigation Capital Management or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Litigation Capital |
| Scandinavian Tobacco |
Litigation Capital and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Scandinavian Tobacco
The main advantage of trading using opposite Litigation Capital and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.| Litigation Capital vs. Toyota Motor Corp | Litigation Capital vs. Neometals | Litigation Capital vs. Coor Service Management | Litigation Capital vs. Jupiter Fund Management |
| Scandinavian Tobacco vs. Lendinvest PLC | Scandinavian Tobacco vs. Neometals | Scandinavian Tobacco vs. Albion Technology General | Scandinavian Tobacco vs. Jupiter Fund Management |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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