Correlation Between Scandic Hotels and AcadeMedia

Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and AcadeMedia 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 AcadeMedia 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 AcadeMedia AB, you can compare the effects of market volatilities on Scandic Hotels and AcadeMedia 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 AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and AcadeMedia.

Diversification Opportunities for Scandic Hotels and AcadeMedia

0.23

Correlation Coefficient

Scandic Hotels  AcadeMedia

Modest diversification

The 3 months correlation between Scandic and AcadeMedia is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB 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 AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and AcadeMedia go up and down completely randomly.

Pair Corralation between Scandic Hotels and AcadeMedia

Assuming the 90 days trading horizon Scandic Hotels is expected to generate 1.94 times less return on investment than AcadeMedia. In addition to that, Scandic Hotels is 1.15 times more volatile than AcadeMedia AB. It trades about 0.05 of its total potential returns per unit of risk. AcadeMedia AB is currently generating about 0.12 per unit of volatility. If you would invest  5,207  in AcadeMedia AB on October 17, 2024 and sell it today you would earn a total of  1,373  from holding AcadeMedia AB or generate 26.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Scandic Hotels Group  vs.  AcadeMedia AB

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AcadeMedia AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AcadeMedia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Scandic Hotels and AcadeMedia

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

The idea behind Scandic Hotels Group and AcadeMedia AB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.