Correlation Between Uranium Energy and Scandinavian Tobacco

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

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

Diversification Opportunities for Uranium Energy and Scandinavian Tobacco

0.23

Correlation Coefficient

Uranium Energy  Scandinavian Tobacco

Modest diversification

The 3 months correlation between Uranium and Scandinavian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Uranium Energy Corp and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and Uranium Energy 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 Uranium Energy Corp 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 Uranium Energy i.e., Uranium Energy and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between Uranium Energy and Scandinavian Tobacco

Considering the 90-day investment horizon Uranium Energy Corp is expected to generate 2.93 times more return on investment than Scandinavian Tobacco. However, Uranium Energy is 2.93 times more volatile than Scandinavian Tobacco Group. It trades about 0.01 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.02 per unit of risk. If you would invest  743.00  in Uranium Energy Corp on October 22, 2024 and sell it today you would lose (35.00) from holding Uranium Energy Corp or give up 4.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Uranium Energy Corp  vs.  Scandinavian Tobacco Group

Uranium Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uranium Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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.

Pair Trading with Uranium Energy and Scandinavian Tobacco

The main advantage of trading using opposite Uranium Energy and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uranium Energy 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 Uranium Energy Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.