Correlation Between Scandinavian Tobacco and Ispire Technology

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

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

Diversification Opportunities for Scandinavian Tobacco and Ispire Technology

-0.13

Correlation Coefficient

Scandinavian Tobacco  Ispire Technology

Good diversification

The 3 months correlation between Scandinavian and Ispire is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Ispire Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ispire Technology Common and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with Ispire Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ispire Technology Common has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Ispire Technology go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Ispire Technology

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.22 times more return on investment than Ispire Technology. However, Scandinavian Tobacco Group is 4.52 times less risky than Ispire Technology. It trades about -0.07 of its potential returns per unit of risk. Ispire Technology Common is currently generating about -0.03 per unit of risk. If you would invest  750.00  in Scandinavian Tobacco Group on September 2, 2024 and sell it today you would lose (34.00) from holding Scandinavian Tobacco Group or give up 4.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  Ispire Technology Common

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 fairly strong technical and fundamental indicators, Scandinavian Tobacco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ispire Technology Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ispire Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Scandinavian Tobacco and Ispire Technology

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

The idea behind Scandinavian Tobacco Group and Ispire Technology Common 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.