Correlation Between Amedeo Air and Scandinavian Tobacco

Can any of the company-specific risk be diversified away by investing in both Amedeo Air and Scandinavian Tobacco 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 Amedeo Air and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amedeo Air Four and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Amedeo Air and Scandinavian Tobacco 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 Amedeo Air with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedeo Air and Scandinavian Tobacco.

Diversification Opportunities for Amedeo Air and Scandinavian Tobacco

0.41

Correlation Coefficient

Amedeo Air  Scandinavian Tobacco

Very weak diversification

The 3 months correlation between Amedeo and Scandinavian is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Amedeo Air Four and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Amedeo Air 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 Amedeo Air Four are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Amedeo Air i.e., Amedeo Air and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between Amedeo Air and Scandinavian Tobacco

Assuming the 90 days trading horizon Amedeo Air Four is expected to generate 2.83 times more return on investment than Scandinavian Tobacco. However, Amedeo Air is 2.83 times more volatile than Scandinavian Tobacco Group. It trades about 0.08 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.09 per unit of risk. If you would invest  5,461  in Amedeo Air Four on December 26, 2024 and sell it today you would earn a total of  699.00  from holding Amedeo Air Four or generate 12.8% return on investment over 90 days.

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

Amedeo Air Four  vs.  Scandinavian Tobacco Group

Amedeo Air Four

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amedeo Air Four are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Amedeo Air exhibited solid returns over the last few months and may actually be approaching a breakup point.

Scandinavian Tobacco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scandinavian Tobacco Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Scandinavian Tobacco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amedeo Air and Scandinavian Tobacco

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

The idea behind Amedeo Air Four and Scandinavian Tobacco Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.