Correlation Between Scandic Hotels and Metacon AB

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

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

Diversification Opportunities for Scandic Hotels and Metacon AB

0.19

Correlation Coefficient

Scandic Hotels  Metacon AB

Average diversification

The 3 months correlation between Scandic and Metacon is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Metacon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metacon AB and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with Metacon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metacon AB has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Metacon AB go up and down completely randomly.

Pair Corralation between Scandic Hotels and Metacon AB

Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 0.2 times more return on investment than Metacon AB. However, Scandic Hotels Group is 4.95 times less risky than Metacon AB. It trades about 0.01 of its potential returns per unit of risk. Metacon AB is currently generating about -0.19 per unit of risk. If you would invest  6,584  in Scandic Hotels Group on October 10, 2024 and sell it today you would earn a total of  11.00  from holding Scandic Hotels Group or generate 0.17% return on investment over 90 days.

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

Scandic Hotels Group  vs.  Metacon AB

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Metacon AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metacon AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Scandic Hotels and Metacon AB

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

The idea behind Scandic Hotels Group and Metacon AB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.