Correlation Between Scandinavian Tobacco and BKV

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

Diversification Opportunities for Scandinavian Tobacco and BKV

-0.95

Correlation Coefficient

Scandinavian Tobacco  BKV

Pay attention - limited upside

The 3 months correlation between Scandinavian and BKV is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation 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 BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and BKV go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and BKV

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the BKV. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.88 times less risky than BKV. The pink sheet trades about -0.01 of its potential returns per unit of risk. The BKV Corporation is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,800  in BKV Corporation on October 4, 2024 and sell it today you would earn a total of  543.00  from holding BKV Corporation or generate 30.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	54.33%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  BKV Corp.

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 latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BKV Corporation

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandinavian Tobacco and BKV

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

The idea behind Scandinavian Tobacco Group and BKV Corporation 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.