Correlation Between Heavitree Brewery and Scandic Hotels

Can any of the company-specific risk be diversified away by investing in both Heavitree Brewery and Scandic Hotels 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 Heavitree Brewery and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heavitree Brewery and Scandic Hotels Group, you can compare the effects of market volatilities on Heavitree Brewery and Scandic Hotels 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 Heavitree Brewery with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heavitree Brewery and Scandic Hotels.

Diversification Opportunities for Heavitree Brewery and Scandic Hotels

0.5

Correlation Coefficient

Heavitree Brewery  Scandic Hotels

Very weak diversification

The 3 months correlation between Heavitree and Scandic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group and Heavitree Brewery 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 Heavitree Brewery are associated (or correlated) with Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Heavitree Brewery i.e., Heavitree Brewery and Scandic Hotels go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Scandic Hotels

If you would invest  6,768  in Scandic Hotels Group on October 24, 2024 and sell it today you would earn a total of  267.00  from holding Scandic Hotels Group or generate 3.95% return on investment over 90 days.

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

Heavitree Brewery  vs.  Scandic Hotels Group

Heavitree Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heavitree Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Scandic Hotels Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandic Hotels Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Scandic Hotels 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 Heavitree Brewery and Scandic Hotels

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

The idea behind Heavitree Brewery and Scandic Hotels 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.