Correlation Between Scandinavian Tobacco and AllovirInc

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

Diversification Opportunities for Scandinavian Tobacco and AllovirInc

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Scandinavian and AllovirInc is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and AllovirInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllovirInc 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 AllovirInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllovirInc has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and AllovirInc go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and AllovirInc

If you would invest  709.00  in AllovirInc on September 5, 2022 and sell it today you would earn a total of  68.00  from holding AllovirInc or generate 9.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Scandinavian Tobacco Group  vs.  AllovirInc

 Performance (%) 
       Timeline  
Scandinavian Tobacco 
Scandinavian Performance
0 of 100
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 rather sound basic indicators, Scandinavian Tobacco is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Scandinavian Price Channel

AllovirInc 
AllovirInc Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AllovirInc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AllovirInc reported solid returns over the last few months and may actually be approaching a breakup point.

AllovirInc Price Channel

Scandinavian Tobacco and AllovirInc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Scandinavian Tobacco and AllovirInc

The main advantage of trading using opposite Scandinavian Tobacco and AllovirInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, AllovirInc 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 AllovirInc will offset losses from the drop in AllovirInc's long position.
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The idea behind Scandinavian Tobacco Group and AllovirInc 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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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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