Correlation Between Scandinavian Tobacco and Kenon Holdings
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Kenon Holdings 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 Kenon Holdings 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 Kenon Holdings, you can compare the effects of market volatilities on Scandinavian Tobacco and Kenon Holdings 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 Kenon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Kenon Holdings.
Diversification Opportunities for Scandinavian Tobacco and Kenon Holdings
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Kenon is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Kenon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenon Holdings 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 Kenon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenon Holdings has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Kenon Holdings go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Kenon Holdings
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Kenon Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 2.01 times less risky than Kenon Holdings. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Kenon Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,461 in Kenon Holdings on August 28, 2024 and sell it today you would earn a total of 525.00 from holding Kenon Holdings or generate 21.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Kenon Holdings
Performance |
| Timeline |
| Scandinavian Tobacco |
| Kenon Holdings |
Scandinavian Tobacco and Kenon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Kenon Holdings
The main advantage of trading using opposite Scandinavian Tobacco and Kenon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Kenon Holdings 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 Kenon Holdings will offset losses from the drop in Kenon Holdings' long position.| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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