Correlation Between Zegona Communications and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Scandic Hotels Group, you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Scandic Hotels.
Diversification Opportunities for Zegona Communications and Scandic Hotels
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Zegona and Scandic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications 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 Zegona Communications 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 Zegona Communications 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 Zegona Communications i.e., Zegona Communications and Scandic Hotels go up and down completely randomly.
Pair Corralation between Zegona Communications and Scandic Hotels
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 3.1 times more return on investment than Scandic Hotels. However, Zegona Communications is 3.1 times more volatile than Scandic Hotels Group. It trades about 0.13 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about -0.16 per unit of risk. If you would invest 32,800 in Zegona Communications Plc on September 4, 2024 and sell it today you would earn a total of 2,400 from holding Zegona Communications Plc or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. Scandic Hotels Group
Performance |
| Timeline |
| Zegona Communications Plc |
| Scandic Hotels Group |
Zegona Communications and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and Scandic Hotels
The main advantage of trading using opposite Zegona Communications and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. Games Workshop Group | Zegona Communications vs. AJ Bell plc | Zegona Communications vs. Auto Trader Group | Zegona Communications vs. 4Imprint Group Plc |
| Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Hyundai Motor | Scandic Hotels vs. Toyota Motor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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