Correlation Between Scandinavian Enviro and Scandic Hotels

Can any of the company-specific risk be diversified away by investing in both Scandinavian Enviro 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 Scandinavian Enviro and Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Scandinavian Enviro 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 Scandinavian Enviro with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Enviro and Scandic Hotels.

Diversification Opportunities for Scandinavian Enviro and Scandic Hotels

0.0

Correlation Coefficient

Scandinavian Enviro  Scandic Hotels

Pay attention - limited upside

The 3 months correlation between Scandinavian and Scandic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Enviro Systems 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 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 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 Scandinavian Enviro i.e., Scandinavian Enviro and Scandic Hotels go up and down completely randomly.

Pair Corralation between Scandinavian Enviro and Scandic Hotels

If you would invest  6,987  in Scandic Hotels Group on April 22, 2025 and sell it today you would earn a total of  1,533  from holding Scandic Hotels Group or generate 21.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Scandinavian Enviro Systems  vs.  Scandic Hotels Group

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.

Scandic Hotels Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scandic Hotels Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Scandic Hotels unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandinavian Enviro and Scandic Hotels

The main advantage of trading using opposite Scandinavian Enviro and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Enviro 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.

The idea behind Scandinavian Enviro Systems and Scandic Hotels Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.