Correlation Between Scandinavian Tobacco and Maj Invest
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Maj Invest 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 Maj Invest 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 Maj Invest Pension, you can compare the effects of market volatilities on Scandinavian Tobacco and Maj Invest 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 Maj Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Maj Invest.
Diversification Opportunities for Scandinavian Tobacco and Maj Invest
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scandinavian and Maj is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Maj Invest Pension in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest Pension 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 Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest Pension has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Maj Invest go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Maj Invest
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to generate 2.51 times more return on investment than Maj Invest. However, Scandinavian Tobacco is 2.51 times more volatile than Maj Invest Pension. It trades about 0.5 of its potential returns per unit of risk. Maj Invest Pension is currently generating about 0.25 per unit of risk. If you would invest 10,220 in Scandinavian Tobacco Group on November 28, 2024 and sell it today you would earn a total of 820.00 from holding Scandinavian Tobacco Group or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Maj Invest Pension
Performance |
| Timeline |
| Scandinavian Tobacco |
| Maj Invest Pension |
Scandinavian Tobacco and Maj Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Maj Invest
The main advantage of trading using opposite Scandinavian Tobacco and Maj Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Maj Invest 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 Maj Invest will offset losses from the drop in Maj Invest'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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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