Correlation Between Scandinavian Tobacco and Nova Vision

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Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Nova Vision 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 Nova Vision 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 Nova Vision Acquisition, you can compare the effects of market volatilities on Scandinavian Tobacco and Nova Vision 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 Nova Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Nova Vision.

Diversification Opportunities for Scandinavian Tobacco and Nova Vision

ScandinavianNovaDiversified AwayScandinavianNovaDiversified Away100%
-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Scandinavian and Nova is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Nova Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Vision Acquisition 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 Nova Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Vision Acquisition has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Nova Vision go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Nova Vision

If you would invest  4,100  in Nova Vision Acquisition on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Nova Vision Acquisition or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy62.5%
ValuesDaily Returns

Scandinavian Tobacco Group  vs.  Nova Vision Acquisition

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 050100150200
JavaScript chart by amCharts 3.21.15STBGY NOVVU
       Timeline  
Scandinavian Tobacco 

Risk-Adjusted Performance

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Weak
 
Strong
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 abnormal 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.
JavaScript chart by amCharts 3.21.15NovDecDec7.27.37.47.57.67.77.8
Nova Vision Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nova Vision Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nova Vision is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Scandinavian Tobacco and Nova Vision Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.48-1.11-0.74-0.37-0.04330.220.590.961.331.7 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15STBGY NOVVU
       Returns  

Pair Trading with Scandinavian Tobacco and Nova Vision

The main advantage of trading using opposite Scandinavian Tobacco and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Nova Vision 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 Nova Vision will offset losses from the drop in Nova Vision's long position.
The idea behind Scandinavian Tobacco Group and Nova Vision Acquisition 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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