Correlation Between SCANSOURCE (SC3SG) and PT Hexindo

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

By analyzing existing cross correlation between SCANSOURCE and PT Hexindo Adiperkasa, you can compare the effects of market volatilities on SCANSOURCE (SC3SG) and PT Hexindo 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 PT Hexindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE (SC3SG) and PT Hexindo.

Diversification Opportunities for SCANSOURCE (SC3SG) and PT Hexindo

-0.63

Correlation Coefficient

SCANSOURCE (SC3SG)  PT Hexindo

Excellent diversification

The 3 months correlation between SCANSOURCE and HX1A is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and PT Hexindo Adiperkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hexindo Adiperkasa 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 PT Hexindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hexindo Adiperkasa has no effect on the direction of SCANSOURCE (SC3SG) i.e., SCANSOURCE (SC3SG) and PT Hexindo go up and down completely randomly.

Pair Corralation between SCANSOURCE (SC3SG) and PT Hexindo

Assuming the 90 days trading horizon SCANSOURCE is expected to generate 0.56 times more return on investment than PT Hexindo. However, SCANSOURCE is 1.8 times less risky than PT Hexindo. It trades about 0.05 of its potential returns per unit of risk. PT Hexindo Adiperkasa is currently generating about 0.02 per unit of risk. If you would invest  4,060  in SCANSOURCE on October 13, 2024 and sell it today you would earn a total of  540.00  from holding SCANSOURCE or generate 13.3% return on investment over 90 days.

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

SCANSOURCE  vs.  PT Hexindo Adiperkasa

SCANSOURCE (SC3SG)

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SCANSOURCE (SC3SG) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PT Hexindo Adiperkasa

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hexindo Adiperkasa are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Hexindo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCANSOURCE (SC3SG) and PT Hexindo

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

The idea behind SCANSOURCE and PT Hexindo Adiperkasa 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.