Correlation Between Lowland Investment and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Lowland Investment 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 Lowland Investment and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowland Investment Co and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Lowland Investment 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 Lowland Investment with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowland Investment and Scandinavian Tobacco.
Diversification Opportunities for Lowland Investment and Scandinavian Tobacco
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lowland and Scandinavian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lowland Investment Co and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Lowland Investment 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 Lowland Investment Co 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 Lowland Investment i.e., Lowland Investment and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Lowland Investment and Scandinavian Tobacco
Assuming the 90 days trading horizon Lowland Investment Co is expected to generate 0.61 times more return on investment than Scandinavian Tobacco. However, Lowland Investment Co is 1.65 times less risky than Scandinavian Tobacco. It trades about -0.03 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.15 per unit of risk. If you would invest 12,650 in Lowland Investment Co on August 26, 2024 and sell it today you would lose (125.00) from holding Lowland Investment Co or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lowland Investment Co vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Lowland Investment |
| Scandinavian Tobacco |
Lowland Investment and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowland Investment and Scandinavian Tobacco
The main advantage of trading using opposite Lowland Investment and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowland Investment 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.| Lowland Investment vs. Ryanair Holdings plc | Lowland Investment vs. Associated British Foods | Lowland Investment vs. Edita Food Industries | Lowland Investment vs. Premier Foods PLC |
| Scandinavian Tobacco vs. Sabre Insurance Group | Scandinavian Tobacco vs. Lowland Investment Co | Scandinavian Tobacco vs. Alliance Data Systems | Scandinavian Tobacco vs. FC Investment Trust |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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