Correlation Between Scandic Hotels and Dentsply Sirona

Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Dentsply Sirona 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 Scandic Hotels and Dentsply Sirona into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Scandic Hotels Group and Dentsply Sirona, you can compare the effects of market volatilities on Scandic Hotels and Dentsply Sirona 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 Scandic Hotels with a short position of Dentsply Sirona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Dentsply Sirona.

Diversification Opportunities for Scandic Hotels and Dentsply Sirona

0.57

Correlation Coefficient

Scandic Hotels  Dentsply Sirona

Very weak diversification

The 3 months correlation between Scandic and Dentsply is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Dentsply Sirona go up and down completely randomly.

Pair Corralation between Scandic Hotels and Dentsply Sirona

Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 0.69 times more return on investment than Dentsply Sirona. However, Scandic Hotels Group is 1.45 times less risky than Dentsply Sirona. It trades about 0.07 of its potential returns per unit of risk. Dentsply Sirona is currently generating about -0.1 per unit of risk. 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	Weak
Accuracy	100.0%
Values	Daily Returns

Scandic Hotels Group  vs.  Dentsply Sirona

Scandic Hotels Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandic Hotels Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Scandic Hotels is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Scandic Hotels and Dentsply Sirona

The main advantage of trading using opposite Scandic Hotels and Dentsply Sirona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, Dentsply Sirona 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 Dentsply Sirona will offset losses from the drop in Dentsply Sirona's long position.

The idea behind Scandic Hotels Group and Dentsply Sirona pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.