Correlation Between Scandinavian Tobacco and Ispire Technology
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Ispire Technology 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 Ispire Technology 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 Ispire Technology Common, you can compare the effects of market volatilities on Scandinavian Tobacco and Ispire Technology 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 Ispire Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Ispire Technology.
Diversification Opportunities for Scandinavian Tobacco and Ispire Technology
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Ispire is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Ispire Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ispire Technology Common 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 Ispire Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ispire Technology Common has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Ispire Technology go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Ispire Technology
Assuming the 90 days horizon Scandinavian Tobacco is expected to generate 2.34 times less return on investment than Ispire Technology. But when comparing it to its historical volatility, Scandinavian Tobacco Group is 3.43 times less risky than Ispire Technology. It trades about 0.03 of its potential returns per unit of risk. Ispire Technology Common is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 755.00 in Ispire Technology Common on August 24, 2024 and sell it today you would lose (134.00) from holding Ispire Technology Common or give up 17.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.47% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Ispire Technology Common
Performance |
| Timeline |
| Scandinavian Tobacco |
| Ispire Technology Common |
Scandinavian Tobacco and Ispire Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Ispire Technology
The main advantage of trading using opposite Scandinavian Tobacco and Ispire Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Ispire Technology 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 Ispire Technology will offset losses from the drop in Ispire Technology's long position.| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. RLX Technology | Scandinavian Tobacco vs. British American Tobacco |
| Ispire Technology vs. Cardinal Health | Ispire Technology vs. Olympic Steel | Ispire Technology vs. Kaiser Aluminum | Ispire Technology vs. SunOpta |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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