Correlation Between Scandic Hotels and Clas Ohlson

Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Clas Ohlson 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 Scandic Hotels and Clas Ohlson into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Scandic Hotels Group and Clas Ohlson AB, you can compare the effects of market volatilities on Scandic Hotels and Clas Ohlson 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 Scandic Hotels with a short position of Clas Ohlson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Clas Ohlson.

Diversification Opportunities for Scandic Hotels and Clas Ohlson

0.84

Correlation Coefficient

Scandic Hotels  Clas Ohlson

Very poor diversification

The 3 months correlation between Scandic and Clas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Clas Ohlson AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clas Ohlson AB and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with Clas Ohlson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clas Ohlson AB has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Clas Ohlson go up and down completely randomly.

Pair Corralation between Scandic Hotels and Clas Ohlson

Assuming the 90 days trading horizon Scandic Hotels is expected to generate 1.78 times less return on investment than Clas Ohlson. But when comparing it to its historical volatility, Scandic Hotels Group is 1.7 times less risky than Clas Ohlson. It trades about 0.12 of its potential returns per unit of risk. Clas Ohlson AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  27,080  in Clas Ohlson AB on April 25, 2025 and sell it today you would earn a total of  5,420  from holding Clas Ohlson AB or generate 20.01% return on investment over 90 days.

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

Scandic Hotels Group  vs.  Clas Ohlson AB

Scandic Hotels Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scandic Hotels Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Scandic Hotels may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Clas Ohlson AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clas Ohlson AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clas Ohlson sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandic Hotels and Clas Ohlson

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

The idea behind Scandic Hotels Group and Clas Ohlson AB 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.