Correlation Between Scandinavian Tobacco and 47216FAA5

Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and 47216FAA5 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 47216FAA5 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 US47216FAA57, you can compare the effects of market volatilities on Scandinavian Tobacco and 47216FAA5 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 47216FAA5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and 47216FAA5.

Diversification Opportunities for Scandinavian Tobacco and 47216FAA5

0.4

Correlation Coefficient

Scandinavian Tobacco  47216FAA5

Very weak diversification

The 3 months correlation between Scandinavian and 47216FAA5 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and US47216FAA57 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US47216FAA57 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 47216FAA5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US47216FAA57 has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and 47216FAA5 go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and 47216FAA5

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the 47216FAA5. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.21 times less risky than 47216FAA5. The pink sheet trades about -0.19 of its potential returns per unit of risk. The US47216FAA57 is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  9,680  in US47216FAA57 on September 29, 2024 and sell it today you would lose (484.00) from holding US47216FAA57 or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  US47216FAA57

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.

US47216FAA57

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US47216FAA57 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 47216FAA5 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scandinavian Tobacco and 47216FAA5

The main advantage of trading using opposite Scandinavian Tobacco and 47216FAA5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, 47216FAA5 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 47216FAA5 will offset losses from the drop in 47216FAA5's long position.

The idea behind Scandinavian Tobacco Group and US47216FAA57 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.