Correlation Between Ferrexpo PLC and Scandic Hotels

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

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

Diversification Opportunities for Ferrexpo PLC and Scandic Hotels

-0.13

Correlation Coefficient

Ferrexpo PLC  Scandic Hotels

Good diversification

The 3 months correlation between Ferrexpo and Scandic is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo 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 Ferrexpo PLC 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 Ferrexpo 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 Ferrexpo PLC i.e., Ferrexpo PLC and Scandic Hotels go up and down completely randomly.

Pair Corralation between Ferrexpo PLC and Scandic Hotels

Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 4.52 times more return on investment than Scandic Hotels. However, Ferrexpo PLC is 4.52 times more volatile than Scandic Hotels Group. It trades about 0.24 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.03 per unit of risk. If you would invest  4,235  in Ferrexpo PLC on September 4, 2024 and sell it today you would earn a total of  5,545  from holding Ferrexpo PLC or generate 130.93% return on investment over 90 days.

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

Ferrexpo PLC  vs.  Scandic Hotels Group

Ferrexpo PLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrexpo PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ferrexpo PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Scandic Hotels Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scandic Hotels Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Ferrexpo PLC and Scandic Hotels

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

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..