Correlation Between Scandinavian Tobacco and North Media
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and North Media 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 North Media 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 North Media AS, you can compare the effects of market volatilities on Scandinavian Tobacco and North Media 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 North Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and North Media.
Diversification Opportunities for Scandinavian Tobacco and North Media
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scandinavian and North is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and North Media AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Media 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 North Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Media AS has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and North Media go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and North Media
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the North Media. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.13 times less risky than North Media. The stock trades about -0.02 of its potential returns per unit of risk. The North Media AS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5,357 in North Media AS on September 4, 2024 and sell it today you would lose (507.00) from holding North Media AS or give up 9.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. North Media AS
Performance |
| Timeline |
| Scandinavian Tobacco |
| North Media AS |
Scandinavian Tobacco and North Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and North Media
The main advantage of trading using opposite Scandinavian Tobacco and North Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, North Media 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 North Media will offset losses from the drop in North Media's long position.| Scandinavian Tobacco vs. Matas AS | Scandinavian Tobacco vs. Tryg AS | Scandinavian Tobacco vs. Alm Brand | Scandinavian Tobacco vs. Royal Unibrew AS |
| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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