Correlation Between Scandinavian Tobacco and Man Wah

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

Diversification Opportunities for Scandinavian Tobacco and Man Wah

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Correlation Coefficient

Scandinavian Tobacco  Man Wah

Pay attention - limited upside

The 3 months correlation between Scandinavian and Man is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Man Wah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Wah Holdings 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 Man Wah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Wah Holdings has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Man Wah go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Man Wah

If you would invest (100.00) in Man Wah Holdings on October 9, 2024 and sell it today you would earn a total of  100.00  from holding Man Wah Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  Man Wah Holdings

Scandinavian Tobacco

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Scandinavian Tobacco Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Man Wah Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Man Wah Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Man Wah is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Scandinavian Tobacco and Man Wah

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

The idea behind Scandinavian Tobacco Group and Man Wah Holdings 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.