Correlation Between 718172CZ0 and Scandinavian Tobacco

Can any of the company-specific risk be diversified away by investing in both 718172CZ0 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 718172CZ0 and Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PM 4875 15 FEB 28 and Scandinavian Tobacco Group, you can compare the effects of market volatilities on 718172CZ0 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 718172CZ0 with a short position of Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of 718172CZ0 and Scandinavian Tobacco.

Diversification Opportunities for 718172CZ0 and Scandinavian Tobacco

0.31

Correlation Coefficient

718172CZ0  Scandinavian Tobacco

Weak diversification

The 3 months correlation between 718172CZ0 and Scandinavian is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PM 4875 15 FEB 28 and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco and 718172CZ0 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 PM 4875 15 FEB 28 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 718172CZ0 i.e., 718172CZ0 and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between 718172CZ0 and Scandinavian Tobacco

Assuming the 90 days trading horizon 718172CZ0 is expected to generate 4.99 times less return on investment than Scandinavian Tobacco. But when comparing it to its historical volatility, PM 4875 15 FEB 28 is 4.29 times less risky than Scandinavian Tobacco. It trades about 0.02 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Scandinavian Tobacco Group on October 12, 2024 and sell it today you would earn a total of  91.00  from holding Scandinavian Tobacco Group or generate 14.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.16%
Values	Daily Returns

PM 4875 15 FEB 28  vs.  Scandinavian Tobacco Group

PM 4875 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PM 4875 15 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 718172CZ0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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. 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 718172CZ0 and Scandinavian Tobacco

The main advantage of trading using opposite 718172CZ0 and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 718172CZ0 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 PM 4875 15 FEB 28 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.