Correlation Between SinterCast and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both SinterCast 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 SinterCast and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SinterCast AB and Scandic Hotels Group, you can compare the effects of market volatilities on SinterCast 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 SinterCast with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of SinterCast and Scandic Hotels.
Diversification Opportunities for SinterCast and Scandic Hotels
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SinterCast and Scandic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SinterCast AB 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 SinterCast 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 SinterCast AB 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 SinterCast i.e., SinterCast and Scandic Hotels go up and down completely randomly.
Pair Corralation between SinterCast and Scandic Hotels
Assuming the 90 days trading horizon SinterCast AB is expected to generate 0.86 times more return on investment than Scandic Hotels. However, SinterCast AB is 1.16 times less risky than Scandic Hotels. It trades about 0.19 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.17 per unit of risk. If you would invest 10,037 in SinterCast AB on April 22, 2025 and sell it today you would earn a total of 1,763 from holding SinterCast AB or generate 17.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SinterCast AB vs. Scandic Hotels Group
Performance |
Timeline |
SinterCast AB |
Scandic Hotels Group |
SinterCast and Scandic Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SinterCast and Scandic Hotels
The main advantage of trading using opposite SinterCast and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SinterCast 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.SinterCast vs. CTT Systems AB | SinterCast vs. Studsvik AB | SinterCast vs. Proact IT Group | SinterCast vs. Rottneros AB |
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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 the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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