Correlation Between Alien Metals and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Alien Metals and Scandinavian Tobacco 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 Alien Metals and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alien Metals and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Alien Metals and Scandinavian Tobacco 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 Alien Metals with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alien Metals and Scandinavian Tobacco.
Diversification Opportunities for Alien Metals and Scandinavian Tobacco
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alien and Scandinavian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Alien Metals 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 Alien Metals are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Alien Metals i.e., Alien Metals and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Alien Metals and Scandinavian Tobacco
Assuming the 90 days trading horizon Alien Metals is expected to under-perform the Scandinavian Tobacco. In addition to that, Alien Metals is 4.68 times more volatile than Scandinavian Tobacco Group. It trades about -0.2 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.47 per unit of volatility. If you would invest 9,565 in Scandinavian Tobacco Group on November 2, 2024 and sell it today you would earn a total of 860.00 from holding Scandinavian Tobacco Group or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alien Metals vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Alien Metals |
| Scandinavian Tobacco |
Alien Metals and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alien Metals and Scandinavian Tobacco
The main advantage of trading using opposite Alien Metals and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alien Metals position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Alien Metals vs. Taiwan Semiconductor Manufacturing | Alien Metals vs. Sabien Technology Group | Alien Metals vs. Nordic Semiconductor ASA | Alien Metals vs. Verizon Communications |
| Scandinavian Tobacco vs. United Airlines Holdings | Scandinavian Tobacco vs. Cars Inc | Scandinavian Tobacco vs. Tyson Foods Cl | Scandinavian Tobacco vs. Raytheon Technologies Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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