Correlation Between BSANCI and Scandinavian Tobacco

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

By analyzing existing cross correlation between BSANCI 3177 26 OCT 31 and Scandinavian Tobacco Group, you can compare the effects of market volatilities on BSANCI 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 BSANCI with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSANCI and Scandinavian Tobacco.

Diversification Opportunities for BSANCI and Scandinavian Tobacco

-0.65

Correlation Coefficient

BSANCI  Scandinavian Tobacco

Excellent diversification

The 3 months correlation between BSANCI and Scandinavian is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BSANCI 3177 26 OCT 31 and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and BSANCI 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 BSANCI 3177 26 OCT 31 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 BSANCI i.e., BSANCI and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between BSANCI and Scandinavian Tobacco

Assuming the 90 days trading horizon BSANCI 3177 26 OCT 31 is expected to under-perform the Scandinavian Tobacco. But the bond apears to be less risky and, when comparing its historical volatility, BSANCI 3177 26 OCT 31 is 1.85 times less risky than Scandinavian Tobacco. The bond trades about -0.33 of its potential returns per unit of risk. The Scandinavian Tobacco Group is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  1,562  in Scandinavian Tobacco Group on October 10, 2024 and sell it today you would lose (217.00) from holding Scandinavian Tobacco Group or give up 13.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	34.92%
Values	Daily Returns

BSANCI 3177 26 OCT 31  vs.  Scandinavian Tobacco Group

BSANCI 3177 26

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSANCI 3177 26 OCT 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BSANCI 3177 26 OCT 31 investors.

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. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BSANCI and Scandinavian Tobacco

The main advantage of trading using opposite BSANCI and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSANCI 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 BSANCI 3177 26 OCT 31 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..