Correlation Between Scandinavian Enviro and Q Linea

Can any of the company-specific risk be diversified away by investing in both Scandinavian Enviro and Q Linea 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 Enviro and Q Linea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Scandinavian Enviro Systems and Q linea AB, you can compare the effects of market volatilities on Scandinavian Enviro and Q Linea 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 Enviro with a short position of Q Linea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Enviro and Q Linea.

Diversification Opportunities for Scandinavian Enviro and Q Linea

-0.28

Correlation Coefficient

Scandinavian Enviro  Q Linea

Very good diversification

The 3 months correlation between Scandinavian and QLINEA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Enviro Systems and Q linea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q linea AB and Scandinavian Enviro 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 Enviro Systems are associated (or correlated) with Q Linea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q linea AB has no effect on the direction of Scandinavian Enviro i.e., Scandinavian Enviro and Q Linea go up and down completely randomly.

Pair Corralation between Scandinavian Enviro and Q Linea

Assuming the 90 days trading horizon Scandinavian Enviro Systems is expected to under-perform the Q Linea. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Enviro Systems is 1.52 times less risky than Q Linea. The stock trades about -0.01 of its potential returns per unit of risk. The Q linea AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,800  in Q linea AB on April 23, 2025 and sell it today you would earn a total of  1,880  from holding Q linea AB or generate 49.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Scandinavian Enviro Systems  vs.  Q linea AB

Scandinavian Enviro

Risk-Adjusted Performance

Very Weak

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

Q linea AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Q linea AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Q Linea sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandinavian Enviro and Q Linea

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

The idea behind Scandinavian Enviro Systems and Q linea 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.