Correlation Between Scandinavian Tobacco and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and National CineMedia 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 National CineMedia 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 National CineMedia, you can compare the effects of market volatilities on Scandinavian Tobacco and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and National CineMedia.
Diversification Opportunities for Scandinavian Tobacco and National CineMedia
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Scandinavian and National is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and National CineMedia go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and National CineMedia
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the National CineMedia. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 2.58 times less risky than National CineMedia. The pink sheet trades about -0.28 of its potential returns per unit of risk. The National CineMedia is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 719.00 in National CineMedia on September 1, 2024 and sell it today you would lose (24.00) from holding National CineMedia or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. National CineMedia
Performance |
| Timeline |
| Scandinavian Tobacco |
| National CineMedia |
Scandinavian Tobacco and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and National CineMedia
The main advantage of trading using opposite Scandinavian Tobacco and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
| National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Kidoz Inc | National CineMedia vs. Marchex |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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