Correlation Between TR Property and Scandinavian Tobacco

Can any of the company-specific risk be diversified away by investing in both TR Property and Scandinavian Tobacco 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 TR Property and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TR Property Investment and Scandinavian Tobacco Group, you can compare the effects of market volatilities on TR Property and Scandinavian Tobacco 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 TR Property with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of TR Property and Scandinavian Tobacco.

Diversification Opportunities for TR Property and Scandinavian Tobacco

-0.22

Correlation Coefficient

TR Property  Scandinavian Tobacco

Very good diversification

The 3 months correlation between TRY and Scandinavian is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding TR Property Investment and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and TR Property 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 TR Property Investment are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of TR Property i.e., TR Property and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between TR Property and Scandinavian Tobacco

Assuming the 90 days trading horizon TR Property Investment is expected to under-perform the Scandinavian Tobacco. In addition to that, TR Property is 1.42 times more volatile than Scandinavian Tobacco Group. It trades about -0.05 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.19 per unit of volatility. If you would invest  9,815  in Scandinavian Tobacco Group on November 28, 2024 and sell it today you would earn a total of  1,085  from holding Scandinavian Tobacco Group or generate 11.05% return on investment over 90 days.

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

TR Property Investment  vs.  Scandinavian Tobacco Group

TR Property Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Scandinavian Tobacco

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scandinavian Tobacco Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Scandinavian Tobacco may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with TR Property and Scandinavian Tobacco

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

The idea behind TR Property Investment and Scandinavian Tobacco 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.