Correlation Between CanSino Biologics and ScanSource

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

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

Diversification Opportunities for CanSino Biologics and ScanSource

0.48

Correlation Coefficient

CanSino Biologics  ScanSource

Very weak diversification

The 3 months correlation between CanSino and ScanSource is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CanSino Biologics and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and CanSino Biologics 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 CanSino Biologics 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 CanSino Biologics i.e., CanSino Biologics and ScanSource go up and down completely randomly.

Pair Corralation between CanSino Biologics and ScanSource

Assuming the 90 days horizon CanSino Biologics is expected to under-perform the ScanSource. In addition to that, CanSino Biologics is 2.06 times more volatile than ScanSource. It trades about -0.02 of its total potential returns per unit of risk. ScanSource is currently generating about 0.05 per unit of volatility. If you would invest  3,249  in ScanSource on October 11, 2024 and sell it today you would earn a total of  1,537  from holding ScanSource or generate 47.31% return on investment over 90 days.

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

CanSino Biologics  vs.  ScanSource

CanSino Biologics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, CanSino Biologics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ScanSource

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CanSino Biologics and ScanSource

The main advantage of trading using opposite CanSino Biologics and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CanSino Biologics 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 CanSino Biologics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.