Correlation Between Scandinavian Tobacco and Carnegie Wealth
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Carnegie Wealth 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 Carnegie Wealth 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 Carnegie Wealth Management, you can compare the effects of market volatilities on Scandinavian Tobacco and Carnegie Wealth 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 Carnegie Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Carnegie Wealth.
Diversification Opportunities for Scandinavian Tobacco and Carnegie Wealth
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scandinavian and Carnegie is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Carnegie Wealth Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Wealth Mana 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 Carnegie Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Wealth Mana has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Carnegie Wealth go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Carnegie Wealth
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Carnegie Wealth. In addition to that, Scandinavian Tobacco is 2.0 times more volatile than Carnegie Wealth Management. It trades about -0.1 of its total potential returns per unit of risk. Carnegie Wealth Management is currently generating about -0.13 per unit of volatility. If you would invest 12,990 in Carnegie Wealth Management on August 29, 2024 and sell it today you would lose (420.00) from holding Carnegie Wealth Management or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Carnegie Wealth Management
Performance |
| Timeline |
| Scandinavian Tobacco |
| Carnegie Wealth Mana |
Scandinavian Tobacco and Carnegie Wealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Carnegie Wealth
The main advantage of trading using opposite Scandinavian Tobacco and Carnegie Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Carnegie Wealth 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 Carnegie Wealth will offset losses from the drop in Carnegie Wealth's long position.| Scandinavian Tobacco vs. Matas AS | Scandinavian Tobacco vs. Tryg AS | Scandinavian Tobacco vs. Alm Brand | Scandinavian Tobacco vs. Royal Unibrew AS |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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