Correlation Between Scandinavian Tobacco and Copenhagen Airports
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Copenhagen Airports 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 Copenhagen Airports 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 Copenhagen Airports AS, you can compare the effects of market volatilities on Scandinavian Tobacco and Copenhagen Airports 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 Copenhagen Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Copenhagen Airports.
Diversification Opportunities for Scandinavian Tobacco and Copenhagen Airports
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scandinavian and Copenhagen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Copenhagen Airports AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copenhagen Airports 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 Copenhagen Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copenhagen Airports has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Copenhagen Airports go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Copenhagen Airports
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Copenhagen Airports. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 5.39 times less risky than Copenhagen Airports. The stock trades about -0.05 of its potential returns per unit of risk. The Copenhagen Airports AS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 415,000 in Copenhagen Airports AS on October 20, 2024 and sell it today you would earn a total of 221,000 from holding Copenhagen Airports AS or generate 53.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Copenhagen Airports AS
Performance |
| Timeline |
| Scandinavian Tobacco |
| Copenhagen Airports |
Scandinavian Tobacco and Copenhagen Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Copenhagen Airports
The main advantage of trading using opposite Scandinavian Tobacco and Copenhagen Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Copenhagen Airports 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 Copenhagen Airports will offset losses from the drop in Copenhagen Airports' long position.| Scandinavian Tobacco vs. Matas AS | Scandinavian Tobacco vs. Tryg AS | Scandinavian Tobacco vs. Alm Brand | Scandinavian Tobacco vs. Royal Unibrew AS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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