Correlation Between Scandinavian Tobacco and FUTURE GAMING
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and FUTURE GAMING 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 Scandinavian Tobacco and FUTURE GAMING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and FUTURE GAMING GRP, you can compare the effects of market volatilities on Scandinavian Tobacco and FUTURE GAMING 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 Scandinavian Tobacco with a short position of FUTURE GAMING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and FUTURE GAMING.
Diversification Opportunities for Scandinavian Tobacco and FUTURE GAMING
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scandinavian and FUTURE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and FUTURE GAMING GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUTURE GAMING GRP and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with FUTURE GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUTURE GAMING GRP has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and FUTURE GAMING go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and FUTURE GAMING
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.54 times more return on investment than FUTURE GAMING. However, Scandinavian Tobacco Group is 1.87 times less risky than FUTURE GAMING. It trades about -0.11 of its potential returns per unit of risk. FUTURE GAMING GRP is currently generating about -0.12 per unit of risk. If you would invest 1,376 in Scandinavian Tobacco Group on September 23, 2024 and sell it today you would lose (136.00) from holding Scandinavian Tobacco Group or give up 9.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 97.73% |
Values | Daily Returns |
Scandinavian Tobacco Group vs. FUTURE GAMING GRP
Performance |
Timeline |
Scandinavian Tobacco |
FUTURE GAMING GRP |
Scandinavian Tobacco and FUTURE GAMING Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scandinavian Tobacco and FUTURE GAMING
The main advantage of trading using opposite Scandinavian Tobacco and FUTURE GAMING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, FUTURE GAMING 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 FUTURE GAMING will offset losses from the drop in FUTURE GAMING's long position.Scandinavian Tobacco vs. Magnachip Semiconductor | Scandinavian Tobacco vs. TOREX SEMICONDUCTOR LTD | Scandinavian Tobacco vs. LEGACY IRON ORE | Scandinavian Tobacco vs. Khiron Life Sciences |
FUTURE GAMING vs. Flutter Entertainment PLC | FUTURE GAMING vs. Evolution AB | FUTURE GAMING vs. Churchill Downs Incorporated | FUTURE GAMING vs. Churchill Downs Incorporated |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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