Correlation Between SCANSOURCE (SC3SG) and SYSTEMAIR

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

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

Diversification Opportunities for SCANSOURCE (SC3SG) and SYSTEMAIR

0.64

Correlation Coefficient

SCANSOURCE (SC3SG)  SYSTEMAIR

Poor diversification

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

Pair Corralation between SCANSOURCE (SC3SG) and SYSTEMAIR

Assuming the 90 days trading horizon SCANSOURCE is expected to under-perform the SYSTEMAIR. In addition to that, SCANSOURCE (SC3SG) is 1.23 times more volatile than SYSTEMAIR AB. It trades about -0.18 of its total potential returns per unit of risk. SYSTEMAIR AB is currently generating about -0.22 per unit of volatility. If you would invest  818.00  in SYSTEMAIR AB on October 10, 2024 and sell it today you would lose (46.00) from holding SYSTEMAIR AB or give up 5.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

SCANSOURCE  vs.  SYSTEMAIR AB

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.

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.

Pair Trading with SCANSOURCE (SC3SG) and SYSTEMAIR

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

The idea behind SCANSOURCE and SYSTEMAIR AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.