Correlation Between Japan Asia and SCANSOURCE (SC3SG)

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

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

Diversification Opportunities for Japan Asia and SCANSOURCE (SC3SG)

0.45

Correlation Coefficient

Japan Asia  SCANSOURCE (SC3SG)

Very weak diversification

The 3 months correlation between Japan and SCANSOURCE is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and Japan Asia 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 Japan Asia Investment 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 Japan Asia i.e., Japan Asia and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between Japan Asia and SCANSOURCE (SC3SG)

Assuming the 90 days horizon Japan Asia is expected to generate 12.49 times less return on investment than SCANSOURCE (SC3SG). In addition to that, Japan Asia is 1.68 times more volatile than SCANSOURCE. It trades about 0.0 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.06 per unit of volatility. If you would invest  3,460  in SCANSOURCE on October 6, 2024 and sell it today you would earn a total of  1,120  from holding SCANSOURCE or generate 32.37% return on investment over 90 days.

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

Japan Asia Investment  vs.  SCANSOURCE

Japan Asia Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Asia Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Japan Asia 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 fragile basic indicators, SCANSOURCE (SC3SG) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Japan Asia and SCANSOURCE (SC3SG)

The main advantage of trading using opposite Japan Asia and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia 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 Japan Asia Investment 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.