Correlation Between Ascent Solar and ScanSource

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

By analyzing existing cross correlation between Ascent Solar Technologies, and ScanSource, you can compare the effects of market volatilities on Ascent Solar and ScanSource 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 Ascent Solar with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascent Solar and ScanSource.

Diversification Opportunities for Ascent Solar and ScanSource

-0.54

Correlation Coefficient

Ascent Solar  ScanSource

Excellent diversification

The 3 months correlation between Ascent and ScanSource is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ascent Solar Technologies, and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Ascent Solar 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 Ascent Solar Technologies, are associated (or correlated) with ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Ascent Solar i.e., Ascent Solar and ScanSource go up and down completely randomly.

Pair Corralation between Ascent Solar and ScanSource

Given the investment horizon of 90 days Ascent Solar Technologies, is expected to under-perform the ScanSource. In addition to that, Ascent Solar is 4.41 times more volatile than ScanSource. It trades about -0.15 of its total potential returns per unit of risk. ScanSource is currently generating about 0.05 per unit of volatility. If you would invest  3,450  in ScanSource on October 26, 2024 and sell it today you would earn a total of  1,652  from holding ScanSource or generate 47.88% return on investment over 90 days.

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

Ascent Solar Technologies,  vs.  ScanSource

Ascent Solar Technol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ascent Solar Technologies, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Ascent Solar is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

ScanSource

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ascent Solar and ScanSource

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

The idea behind Ascent Solar Technologies, 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.