Correlation Between Scandinavian Tobacco and Evolution Mining

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on Scandinavian Tobacco and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Evolution Mining.

Diversification Opportunities for Scandinavian Tobacco and Evolution Mining

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Scandinavian and Evolution is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Evolution Mining go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Evolution Mining

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Evolution Mining. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.59 times less risky than Evolution Mining. The stock trades about -0.01 of its potential returns per unit of risk. The Evolution Mining Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Evolution Mining Limited on September 23, 2024 and sell it today you would earn a total of  76.00  from holding Evolution Mining Limited or generate 36.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Scandinavian Tobacco Group  vs.  Evolution Mining Limited

 Performance 
       Timeline  
Scandinavian Tobacco 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Evolution Mining 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Scandinavian Tobacco and Evolution Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Scandinavian Tobacco and Evolution Mining

The main advantage of trading using opposite Scandinavian Tobacco and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.
The idea behind Scandinavian Tobacco Group and Evolution Mining Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Other Complementary Tools

Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine