Correlation Between LTC Properties and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both LTC Properties 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 LTC Properties and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LTC Properties and Scandinavian Tobacco Group, you can compare the effects of market volatilities on LTC Properties 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 LTC Properties with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTC Properties and Scandinavian Tobacco.
Diversification Opportunities for LTC Properties and Scandinavian Tobacco
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LTC and Scandinavian is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding LTC Properties and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and LTC Properties 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 LTC Properties 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 LTC Properties i.e., LTC Properties and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between LTC Properties and Scandinavian Tobacco
Assuming the 90 days horizon LTC Properties is expected to generate 3.07 times less return on investment than Scandinavian Tobacco. But when comparing it to its historical volatility, LTC Properties is 1.1 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 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,242 in Scandinavian Tobacco Group on October 24, 2024 and sell it today you would earn a total of 76.00 from holding Scandinavian Tobacco Group or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LTC Properties vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| LTC Properties |
| Scandinavian Tobacco |
LTC Properties and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LTC Properties and Scandinavian Tobacco
The main advantage of trading using opposite LTC Properties and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTC Properties 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.| LTC Properties vs. Soken Chemical Engineering | LTC Properties vs. INDO RAMA SYNTHETIC | LTC Properties vs. Sinopec Shanghai Petrochemical | LTC Properties vs. AIR PRODCHEMICALS |
| Scandinavian Tobacco vs. FIH MOBILE | Scandinavian Tobacco vs. Singapore Telecommunications Limited | Scandinavian Tobacco vs. Entravision Communications | Scandinavian Tobacco vs. Geely Automobile Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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