Correlation Between Scandinavian Tobacco and 126650BR0

Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and 126650BR0 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 126650BR0 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 CVS HEALTH P, you can compare the effects of market volatilities on Scandinavian Tobacco and 126650BR0 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 126650BR0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and 126650BR0.

Diversification Opportunities for Scandinavian Tobacco and 126650BR0

0.0

Correlation Coefficient

Scandinavian Tobacco  126650BR0

Pay attention - limited upside

The 3 months correlation between Scandinavian and 126650BR0 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and CVS HEALTH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH P 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 126650BR0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH P has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and 126650BR0 go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and 126650BR0

If you would invest  716.00  in Scandinavian Tobacco Group on December 2, 2024 and sell it today you would earn a total of  90.00  from holding Scandinavian Tobacco Group or generate 12.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  CVS HEALTH P

Scandinavian Tobacco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scandinavian Tobacco Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Scandinavian Tobacco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CVS HEALTH P

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVS HEALTH P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 126650BR0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scandinavian Tobacco and 126650BR0

The main advantage of trading using opposite Scandinavian Tobacco and 126650BR0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, 126650BR0 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 126650BR0 will offset losses from the drop in 126650BR0's long position.

The idea behind Scandinavian Tobacco Group and CVS HEALTH P 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.