Correlation Between Triad Group and Scandic Hotels

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

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

Diversification Opportunities for Triad Group and Scandic Hotels

-0.07

Correlation Coefficient

Triad Group  Scandic Hotels

Good diversification

The 3 months correlation between Triad and Scandic is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC 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 Triad Group 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 Triad Group PLC 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 Triad Group i.e., Triad Group and Scandic Hotels go up and down completely randomly.

Pair Corralation between Triad Group and Scandic Hotels

Assuming the 90 days trading horizon Triad Group PLC is expected to under-perform the Scandic Hotels. In addition to that, Triad Group is 1.02 times more volatile than Scandic Hotels Group. It trades about -0.41 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.07 per unit of volatility. If you would invest  6,554  in Scandic Hotels Group on September 23, 2024 and sell it today you would earn a total of  126.00  from holding Scandic Hotels Group or generate 1.92% return on investment over 90 days.

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

Triad Group PLC  vs.  Scandic Hotels Group

Triad Group PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Triad Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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

Pair Trading with Triad Group and Scandic Hotels

The main advantage of trading using opposite Triad Group and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triad Group 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 Triad Group PLC 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.