Correlation Between Lollands Bank and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Lollands Bank 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 Lollands Bank and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lollands Bank and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Lollands Bank 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 Lollands Bank with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lollands Bank and Scandinavian Tobacco.
Diversification Opportunities for Lollands Bank and Scandinavian Tobacco
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lollands and Scandinavian is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Lollands Bank 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 Lollands Bank 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 Lollands Bank i.e., Lollands Bank and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Lollands Bank and Scandinavian Tobacco
Assuming the 90 days trading horizon Lollands Bank is expected to generate 1.0 times more return on investment than Scandinavian Tobacco. However, Lollands Bank is 1.0 times more volatile than Scandinavian Tobacco Group. It trades about 0.01 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 56,500 in Lollands Bank on August 25, 2024 and sell it today you would lose (500.00) from holding Lollands Bank or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lollands Bank vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Lollands Bank |
| Scandinavian Tobacco |
Lollands Bank and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lollands Bank and Scandinavian Tobacco
The main advantage of trading using opposite Lollands Bank and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank 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.| Lollands Bank vs. Dataproces Group AS | Lollands Bank vs. cBrain AS | Lollands Bank vs. ALK Abell AS | Lollands Bank vs. ChemoMetec AS |
| Scandinavian Tobacco vs. Matas AS | Scandinavian Tobacco vs. Tryg AS | Scandinavian Tobacco vs. Alm Brand | Scandinavian Tobacco vs. Royal Unibrew AS |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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