Correlation Between SYSTEMAIR and SCANSOURCE (SC3SG)

Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and SCANSOURCE (SC3SG) 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 SYSTEMAIR and SCANSOURCE (SC3SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SYSTEMAIR AB and SCANSOURCE, you can compare the effects of market volatilities on SYSTEMAIR and SCANSOURCE (SC3SG) 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 SYSTEMAIR with a short position of SCANSOURCE (SC3SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and SCANSOURCE (SC3SG).

Diversification Opportunities for SYSTEMAIR and SCANSOURCE (SC3SG)

0.64

Correlation Coefficient

SYSTEMAIR  SCANSOURCE (SC3SG)

Poor diversification

The 3 months correlation between SYSTEMAIR and SCANSOURCE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and SYSTEMAIR 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 SYSTEMAIR AB are associated (or correlated) with SCANSOURCE (SC3SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE (SC3SG) has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between SYSTEMAIR and SCANSOURCE (SC3SG)

Assuming the 90 days trading horizon SYSTEMAIR is expected to generate 1.57 times less return on investment than SCANSOURCE (SC3SG). But when comparing it to its historical volatility, SYSTEMAIR AB is 1.11 times less risky than SCANSOURCE (SC3SG). It trades about 0.04 of its potential returns per unit of risk. SCANSOURCE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,320  in SCANSOURCE on October 10, 2024 and sell it today you would earn a total of  280.00  from holding SCANSOURCE or generate 6.48% return on investment over 90 days.

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

SYSTEMAIR AB  vs.  SCANSOURCE

SYSTEMAIR AB

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SCANSOURCE (SC3SG)

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SCANSOURCE (SC3SG) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SYSTEMAIR and SCANSOURCE (SC3SG)

The main advantage of trading using opposite SYSTEMAIR and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG) will offset losses from the drop in SCANSOURCE (SC3SG)'s long position.

The idea behind SYSTEMAIR AB and SCANSOURCE 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.