Correlation Between Versarien PLC and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Versarien PLC 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 Versarien PLC and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versarien PLC and Scandic Hotels Group, you can compare the effects of market volatilities on Versarien PLC 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 Versarien PLC with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versarien PLC and Scandic Hotels.
Diversification Opportunities for Versarien PLC and Scandic Hotels
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Versarien and Scandic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Versarien 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 Versarien PLC 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 Versarien 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 Versarien PLC i.e., Versarien PLC and Scandic Hotels go up and down completely randomly.
Pair Corralation between Versarien PLC and Scandic Hotels
Assuming the 90 days trading horizon Versarien PLC is expected to under-perform the Scandic Hotels. In addition to that, Versarien PLC is 4.89 times more volatile than Scandic Hotels Group. It trades about -0.13 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about -0.06 per unit of volatility. If you would invest 7,030 in Scandic Hotels Group on August 30, 2024 and sell it today you would lose (317.00) from holding Scandic Hotels Group or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versarien PLC vs. Scandic Hotels Group
Performance |
| Timeline |
| Versarien PLC |
| Scandic Hotels Group |
Versarien PLC and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versarien PLC and Scandic Hotels
The main advantage of trading using opposite Versarien PLC and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versarien PLC 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.| Versarien PLC vs. Telecom Italia SpA | Versarien PLC vs. JD Sports Fashion | Versarien PLC vs. Universal Display Corp | Versarien PLC vs. CleanTech Lithium plc |
| Scandic Hotels vs. Tungsten West PLC | Scandic Hotels vs. Argo Group Limited | Scandic Hotels vs. Hardide PLC | Scandic Hotels vs. Versarien PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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