Correlation Between CHINA EDUCATION and ScanSource
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION 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 CHINA EDUCATION and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and ScanSource, you can compare the effects of market volatilities on CHINA EDUCATION 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 CHINA EDUCATION with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and ScanSource.
Diversification Opportunities for CHINA EDUCATION and ScanSource
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and ScanSource is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and CHINA EDUCATION 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 CHINA EDUCATION GROUP 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 CHINA EDUCATION i.e., CHINA EDUCATION and ScanSource go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and ScanSource
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 2.26 times more return on investment than ScanSource. However, CHINA EDUCATION is 2.26 times more volatile than ScanSource. It trades about 0.05 of its potential returns per unit of risk. ScanSource is currently generating about 0.05 per unit of risk. If you would invest 24.00 in CHINA EDUCATION GROUP on August 24, 2024 and sell it today you would earn a total of 23.00 from holding CHINA EDUCATION GROUP or generate 95.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. ScanSource
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| ScanSource |
CHINA EDUCATION and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and ScanSource
The main advantage of trading using opposite CHINA EDUCATION and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION 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.| CHINA EDUCATION vs. CENTURIA OFFICE REIT | CHINA EDUCATION vs. Tower One Wireless | CHINA EDUCATION vs. DFS Furniture PLC | CHINA EDUCATION vs. Beazer Homes USA |
| ScanSource vs. TreeHouse Foods | ScanSource vs. Astral Foods Limited | ScanSource vs. National Beverage Corp | ScanSource vs. CN MODERN DAIRY |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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