Correlation Between Playtech Plc and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Playtech Plc 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 Playtech Plc and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech Plc and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Playtech Plc 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 Playtech Plc with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Scandinavian Tobacco.
Diversification Opportunities for Playtech Plc and Scandinavian Tobacco
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Playtech and Scandinavian is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Playtech Plc 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 Playtech Plc 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 Playtech Plc i.e., Playtech Plc and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Playtech Plc and Scandinavian Tobacco
Assuming the 90 days trading horizon Playtech Plc is expected to generate 1.62 times less return on investment than Scandinavian Tobacco. In addition to that, Playtech Plc is 1.66 times more volatile than Scandinavian Tobacco Group. It trades about 0.13 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.35 per unit of volatility. If you would invest 9,735 in Scandinavian Tobacco Group on November 4, 2024 and sell it today you would earn a total of 610.00 from holding Scandinavian Tobacco Group or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech Plc vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Playtech Plc |
| Scandinavian Tobacco |
Playtech Plc and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and Scandinavian Tobacco
The main advantage of trading using opposite Playtech Plc and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc 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.| Playtech Plc vs. Spotify Technology SA | Playtech Plc vs. Software Circle plc | Playtech Plc vs. Vitec Software Group | Playtech Plc vs. Ashtead Technology Holdings |
| Scandinavian Tobacco vs. Geely Automobile Holdings | Scandinavian Tobacco vs. Arrow Electronics | Scandinavian Tobacco vs. Batm Advanced Communications | Scandinavian Tobacco vs. MTI Wireless Edge |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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