Correlation Between Scandinavian Tobacco and EMCOR
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and EMCOR 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 Scandinavian Tobacco and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and EMCOR Group, you can compare the effects of market volatilities on Scandinavian Tobacco and EMCOR 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 Scandinavian Tobacco with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and EMCOR.
Diversification Opportunities for Scandinavian Tobacco and EMCOR
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scandinavian and EMCOR is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and EMCOR go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and EMCOR
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.58 times more return on investment than EMCOR. However, Scandinavian Tobacco Group is 1.72 times less risky than EMCOR. It trades about -0.22 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.21 per unit of risk. If you would invest 756.00 in Scandinavian Tobacco Group on September 12, 2024 and sell it today you would lose (40.00) from holding Scandinavian Tobacco Group or give up 5.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. EMCOR Group
Performance |
| Timeline |
| Scandinavian Tobacco |
| EMCOR Group |
Scandinavian Tobacco and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and EMCOR
The main advantage of trading using opposite Scandinavian Tobacco and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR's long position.| Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. RLX Technology | Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. Turning Point Brands |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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