Correlation Between Scandinavian Tobacco and ASURE SOFTWARE

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

Diversification Opportunities for Scandinavian Tobacco and ASURE SOFTWARE

-0.56

Correlation Coefficient

Scandinavian Tobacco  ASURE SOFTWARE

Excellent diversification

The 3 months correlation between Scandinavian and ASURE is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and ASURE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASURE SOFTWARE 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 ASURE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASURE SOFTWARE has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and ASURE SOFTWARE go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and ASURE SOFTWARE

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 1.71 times more return on investment than ASURE SOFTWARE. However, Scandinavian Tobacco is 1.71 times more volatile than ASURE SOFTWARE. It trades about 0.06 of its potential returns per unit of risk. ASURE SOFTWARE is currently generating about 0.03 per unit of risk. If you would invest  408.00  in Scandinavian Tobacco Group on October 11, 2024 and sell it today you would earn a total of  884.00  from holding Scandinavian Tobacco Group or generate 216.67% return on investment over 90 days.

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

Scandinavian Tobacco Group  vs.  ASURE SOFTWARE

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 latest fragile 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.

ASURE SOFTWARE

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ASURE SOFTWARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandinavian Tobacco and ASURE SOFTWARE

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

The idea behind Scandinavian Tobacco Group and ASURE SOFTWARE 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.