Correlation Between Scandinavian Tobacco and Sysco Corp

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

Diversification Opportunities for Scandinavian Tobacco and Sysco Corp

-0.71

Correlation Coefficient

Scandinavian Tobacco  Sysco Corp

Pay attention - limited upside

The 3 months correlation between Scandinavian and Sysco is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Sysco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco Corp 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 Sysco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco Corp has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Sysco Corp go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Sysco Corp

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Sysco Corp. In addition to that, Scandinavian Tobacco is 1.55 times more volatile than Sysco Corp. It trades about -0.02 of its total potential returns per unit of risk. Sysco Corp is currently generating about 0.05 per unit of volatility. If you would invest  6,797  in Sysco Corp on October 24, 2024 and sell it today you would earn a total of  203.00  from holding Sysco Corp or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  Sysco Corp

Scandinavian Tobacco

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, Scandinavian Tobacco is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sysco Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sysco Corp 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 Scandinavian Tobacco and Sysco Corp

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

The idea behind Scandinavian Tobacco Group and Sysco Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.