Correlation Between Scandinavian Tobacco and Pyxus International

Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Pyxus International 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 Pyxus International 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 Pyxus International, you can compare the effects of market volatilities on Scandinavian Tobacco and Pyxus International 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 Pyxus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Pyxus International.

Diversification Opportunities for Scandinavian Tobacco and Pyxus International

0.31

Correlation Coefficient

Scandinavian Tobacco  Pyxus International

Weak diversification

The 3 months correlation between Scandinavian and Pyxus is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Pyxus International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxus International 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 Pyxus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxus International has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Pyxus International go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Pyxus International

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Pyxus International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 8.05 times less risky than Pyxus International. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Pyxus International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Pyxus International on October 23, 2024 and sell it today you would lose (5.00) from holding Pyxus International or give up 1.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  Pyxus International

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. Despite latest unsteady 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.

Pyxus International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pyxus International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pyxus International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandinavian Tobacco and Pyxus International

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

The idea behind Scandinavian Tobacco Group and Pyxus International 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.