Correlation Between Scandic Hotels and Mindflair Plc

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

Diversification Opportunities for Scandic Hotels and Mindflair Plc

0.22

Correlation Coefficient

Scandic Hotels  Mindflair Plc

Modest diversification

The 3 months correlation between Scandic and Mindflair is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Mindflair Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mindflair Plc 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 Mindflair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mindflair Plc has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Mindflair Plc go up and down completely randomly.

Pair Corralation between Scandic Hotels and Mindflair Plc

Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 0.56 times more return on investment than Mindflair Plc. However, Scandic Hotels Group is 1.8 times less risky than Mindflair Plc. It trades about 0.23 of its potential returns per unit of risk. Mindflair Plc is currently generating about -0.52 per unit of risk. If you would invest  7,728  in Scandic Hotels Group on December 2, 2024 and sell it today you would earn a total of  672.00  from holding Scandic Hotels Group or generate 8.7% 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.  Mindflair Plc

Scandic Hotels Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scandic Hotels Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Scandic Hotels unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mindflair Plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mindflair Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mindflair Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandic Hotels and Mindflair Plc

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

The idea behind Scandic Hotels Group and Mindflair Plc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.