Correlation Between NH Hotel and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both NH Hotel 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 NH Hotel and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Hotel Group and Scandinavian Tobacco Group, you can compare the effects of market volatilities on NH Hotel 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 NH Hotel with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hotel and Scandinavian Tobacco.
Diversification Opportunities for NH Hotel and Scandinavian Tobacco
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NHHEF and Scandinavian is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NH Hotel Group and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and NH Hotel 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 NH Hotel Group 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 NH Hotel i.e., NH Hotel and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between NH Hotel and Scandinavian Tobacco
If you would invest 540.00 in NH Hotel Group on October 20, 2024 and sell it today you would earn a total of 0.00 from holding NH Hotel Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
NH Hotel Group vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| NH Hotel Group |
| Scandinavian Tobacco |
NH Hotel and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Hotel and Scandinavian Tobacco
The main advantage of trading using opposite NH Hotel and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Hotel 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.| NH Hotel vs. Universal Electronics | NH Hotel vs. VOXX International | NH Hotel vs. Sony Group Corp | NH Hotel vs. TCL Electronics Holdings |
| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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