Correlation Between CarsalesCom and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both CarsalesCom 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 CarsalesCom and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Scandinavian Tobacco Group, you can compare the effects of market volatilities on CarsalesCom 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 CarsalesCom with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Scandinavian Tobacco.
Diversification Opportunities for CarsalesCom and Scandinavian Tobacco
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CarsalesCom and Scandinavian is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and CarsalesCom 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 CarsalesCom 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 CarsalesCom i.e., CarsalesCom and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between CarsalesCom and Scandinavian Tobacco
Assuming the 90 days horizon CarsalesCom is expected to generate 0.52 times more return on investment than Scandinavian Tobacco. However, CarsalesCom is 1.91 times less risky than Scandinavian Tobacco. It trades about -0.1 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.11 per unit of risk. If you would invest 2,440 in CarsalesCom on September 13, 2024 and sell it today you would lose (80.00) from holding CarsalesCom or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| CarsalesCom |
| Scandinavian Tobacco |
CarsalesCom and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Scandinavian Tobacco
The main advantage of trading using opposite CarsalesCom and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom 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.| CarsalesCom vs. Tencent Holdings | CarsalesCom vs. Superior Plus Corp | CarsalesCom vs. SIVERS SEMICONDUCTORS AB | CarsalesCom vs. NorAm Drilling AS |
| Scandinavian Tobacco vs. HomeToGo SE | Scandinavian Tobacco vs. Gruppo Mutuionline SpA | Scandinavian Tobacco vs. SIEM OFFSHORE NEW | Scandinavian Tobacco vs. Taylor Morrison Home |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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