Correlation Between Scandinavian Tobacco and SPORTING

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

Diversification Opportunities for Scandinavian Tobacco and SPORTING

0.35

Correlation Coefficient

Scandinavian Tobacco  SPORTING

Weak diversification

The 3 months correlation between Scandinavian and SPORTING is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and SPORTING go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and SPORTING

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.7 times more return on investment than SPORTING. However, Scandinavian Tobacco Group is 1.43 times less risky than SPORTING. It trades about -0.01 of its potential returns per unit of risk. SPORTING is currently generating about -0.01 per unit of risk. If you would invest  1,204  in Scandinavian Tobacco Group on April 24, 2025 and sell it today you would lose (38.00) from holding Scandinavian Tobacco Group or give up 3.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Scandinavian Tobacco Group  vs.  SPORTING

Scandinavian Tobacco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scandinavian Tobacco Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Scandinavian Tobacco is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SPORTING

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Scandinavian Tobacco and SPORTING

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

The idea behind Scandinavian Tobacco Group and SPORTING 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.