Correlation Between Various Eateries and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Various Eateries and Scandic Hotels 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 Various Eateries and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Various Eateries PLC and Scandic Hotels Group, you can compare the effects of market volatilities on Various Eateries and Scandic Hotels 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 Various Eateries with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Various Eateries and Scandic Hotels.
Diversification Opportunities for Various Eateries and Scandic Hotels
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Various and Scandic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Various Eateries PLC and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group and Various Eateries 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 Various Eateries PLC are associated (or correlated) with Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Various Eateries i.e., Various Eateries and Scandic Hotels go up and down completely randomly.
Pair Corralation between Various Eateries and Scandic Hotels
Assuming the 90 days trading horizon Various Eateries PLC is expected to under-perform the Scandic Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Various Eateries PLC is 1.19 times less risky than Scandic Hotels. The stock trades about -0.41 of its potential returns per unit of risk. The Scandic Hotels Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,589 in Scandic Hotels Group on October 11, 2024 and sell it today you would earn a total of 114.00 from holding Scandic Hotels Group or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Various Eateries PLC vs. Scandic Hotels Group
Performance |
| Timeline |
| Various Eateries PLC |
| Scandic Hotels Group |
Various Eateries and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Various Eateries and Scandic Hotels
The main advantage of trading using opposite Various Eateries and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Various Eateries position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Various Eateries vs. Dairy Farm International | Various Eateries vs. Global Net Lease | Various Eateries vs. Edita Food Industries | Various Eateries vs. Associated British Foods |
| Scandic Hotels vs. Empire Metals Limited | Scandic Hotels vs. Various Eateries PLC | Scandic Hotels vs. Morgan Advanced Materials | Scandic Hotels vs. Vulcan Materials Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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