Correlation Between KOBE STEEL and SCANSOURCE (SC3SG)

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

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

Diversification Opportunities for KOBE STEEL and SCANSOURCE (SC3SG)

-0.92

Correlation Coefficient

KOBE STEEL  SCANSOURCE (SC3SG)

Pay attention - limited upside

The 3 months correlation between KOBE and SCANSOURCE is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding KOBE STEEL LTD and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and KOBE STEEL 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 KOBE STEEL LTD 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 KOBE STEEL i.e., KOBE STEEL and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between KOBE STEEL and SCANSOURCE (SC3SG)

Assuming the 90 days trading horizon KOBE STEEL LTD is expected to generate 0.89 times more return on investment than SCANSOURCE (SC3SG). However, KOBE STEEL LTD is 1.12 times less risky than SCANSOURCE (SC3SG). It trades about 0.17 of its potential returns per unit of risk. SCANSOURCE is currently generating about -0.22 per unit of risk. If you would invest  954.00  in KOBE STEEL LTD on December 24, 2024 and sell it today you would earn a total of  207.00  from holding KOBE STEEL LTD or generate 21.7% return on investment over 90 days.

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

KOBE STEEL LTD  vs.  SCANSOURCE

KOBE STEEL LTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KOBE STEEL LTD are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, KOBE STEEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

SCANSOURCE (SC3SG)

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCANSOURCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with KOBE STEEL and SCANSOURCE (SC3SG)

The main advantage of trading using opposite KOBE STEEL and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOBE STEEL 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 KOBE STEEL LTD 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.