Correlation Between Scandinavian Tobacco and Peoples Educational
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Peoples Educational 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 Peoples Educational 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 Peoples Educational Holdings, you can compare the effects of market volatilities on Scandinavian Tobacco and Peoples Educational 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 Peoples Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Peoples Educational.
Diversification Opportunities for Scandinavian Tobacco and Peoples Educational
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scandinavian and Peoples is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Peoples Educational Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Educational 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 Peoples Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Educational has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Peoples Educational go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Peoples Educational
Assuming the 90 days horizon Scandinavian Tobacco is expected to generate 50.16 times less return on investment than Peoples Educational. But when comparing it to its historical volatility, Scandinavian Tobacco Group is 27.59 times less risky than Peoples Educational. It trades about 0.03 of its potential returns per unit of risk. Peoples Educational Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Peoples Educational Holdings on September 3, 2024 and sell it today you would earn a total of 1.99 from holding Peoples Educational Holdings or generate 19900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.18% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Peoples Educational Holdings
Performance |
| Timeline |
| Scandinavian Tobacco |
| Peoples Educational |
Scandinavian Tobacco and Peoples Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Peoples Educational
The main advantage of trading using opposite Scandinavian Tobacco and Peoples Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Peoples Educational 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 Peoples Educational will offset losses from the drop in Peoples Educational'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 |
| Peoples Educational vs. Telefonica Brasil SA | Peoples Educational vs. Vodafone Group PLC | Peoples Educational vs. Grupo Televisa SAB | Peoples Educational vs. America Movil SAB |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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