Correlation Between Scandinavian Tobacco and Data Modul

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

Diversification Opportunities for Scandinavian Tobacco and Data Modul

-0.15

Correlation Coefficient

Scandinavian Tobacco  Data Modul

Good diversification

The 3 months correlation between Scandinavian and Data is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Data Modul AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Modul AG 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 Data Modul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Modul AG has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Data Modul go up and down completely randomly.

Pair Corralation between Scandinavian Tobacco and Data Modul

Assuming the 90 days horizon Scandinavian Tobacco Group is expected to generate 0.79 times more return on investment than Data Modul. However, Scandinavian Tobacco Group is 1.26 times less risky than Data Modul. It trades about -0.01 of its potential returns per unit of risk. Data Modul AG is currently generating about -0.06 per unit of risk. If you would invest  1,290  in Scandinavian Tobacco Group on May 8, 2025 and sell it today you would lose (158.00) from holding Scandinavian Tobacco Group or give up 12.25% of portfolio value over 90 days.

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

Scandinavian Tobacco Group  vs.  Data Modul AG

Scandinavian Tobacco

Risk-Adjusted Performance

Weakest

Over the last 90 days Scandinavian Tobacco Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Data Modul AG

Risk-Adjusted Performance

Weakest

Over the last 90 days Data Modul AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Data Modul is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Scandinavian Tobacco and Data Modul

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

The idea behind Scandinavian Tobacco Group and Data Modul AG 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.