Correlation Between Scandinavian Tobacco and Kreditbanken
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Kreditbanken 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 Kreditbanken 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 Kreditbanken AS, you can compare the effects of market volatilities on Scandinavian Tobacco and Kreditbanken 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 Kreditbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Kreditbanken.
Diversification Opportunities for Scandinavian Tobacco and Kreditbanken
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Scandinavian and Kreditbanken is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Kreditbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreditbanken AS 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 Kreditbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreditbanken AS has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Kreditbanken go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Kreditbanken
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Kreditbanken. In addition to that, Scandinavian Tobacco is 1.23 times more volatile than Kreditbanken AS. It trades about -0.04 of its total potential returns per unit of risk. Kreditbanken AS is currently generating about 0.04 per unit of volatility. If you would invest 450,000 in Kreditbanken AS on September 12, 2024 and sell it today you would earn a total of 55,000 from holding Kreditbanken AS or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Kreditbanken AS
Performance |
| Timeline |
| Scandinavian Tobacco |
| Kreditbanken AS |
Scandinavian Tobacco and Kreditbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Kreditbanken
The main advantage of trading using opposite Scandinavian Tobacco and Kreditbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Kreditbanken 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 Kreditbanken will offset losses from the drop in Kreditbanken's long position.| Scandinavian Tobacco vs. Matas AS | Scandinavian Tobacco vs. Tryg AS | Scandinavian Tobacco vs. Alm Brand | Scandinavian Tobacco vs. Royal Unibrew AS |
| Kreditbanken vs. Lollands Bank | Kreditbanken vs. Groenlandsbanken AS | Kreditbanken vs. Skjern Bank AS | Kreditbanken vs. Djurslands Bank |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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