Correlation Between Eastinco Mining and Scandinavian Tobacco

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

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

Diversification Opportunities for Eastinco Mining and Scandinavian Tobacco

0.2

Correlation Coefficient

Eastinco Mining  Scandinavian Tobacco

Modest diversification

The 3 months correlation between Eastinco and Scandinavian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eastinco Mining Exploration and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Eastinco Mining 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 Eastinco Mining Exploration 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 Eastinco Mining i.e., Eastinco Mining and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between Eastinco Mining and Scandinavian Tobacco

Assuming the 90 days trading horizon Eastinco Mining Exploration is expected to generate 185.64 times more return on investment than Scandinavian Tobacco. However, Eastinco Mining is 185.64 times more volatile than Scandinavian Tobacco Group. It trades about 0.27 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.0 per unit of risk. If you would invest  0.60  in Eastinco Mining Exploration on October 20, 2024 and sell it today you would earn a total of  5,399  from holding Eastinco Mining Exploration or generate 899900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.2%
Values	Daily Returns

Eastinco Mining Exploration  vs.  Scandinavian Tobacco Group

Eastinco Mining Expl

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eastinco Mining Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eastinco Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. In spite of comparatively stable basic indicators, Scandinavian Tobacco is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eastinco Mining and Scandinavian Tobacco

The main advantage of trading using opposite Eastinco Mining and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastinco Mining 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 Eastinco Mining Exploration 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.

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.