Correlation Between DAIRY FARM and SCANSOURCE (SC3SG)
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM 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 DAIRY FARM and SCANSOURCE (SC3SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and SCANSOURCE, you can compare the effects of market volatilities on DAIRY FARM 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 DAIRY FARM with a short position of SCANSOURCE (SC3SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and SCANSOURCE (SC3SG).
Diversification Opportunities for DAIRY FARM and SCANSOURCE (SC3SG)
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DAIRY and SCANSOURCE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and DAIRY FARM 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 DAIRY FARM INTL 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 DAIRY FARM i.e., DAIRY FARM and SCANSOURCE (SC3SG) go up and down completely randomly.
Pair Corralation between DAIRY FARM and SCANSOURCE (SC3SG)
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to under-perform the SCANSOURCE (SC3SG). But the stock apears to be less risky and, when comparing its historical volatility, DAIRY FARM INTL is 1.46 times less risky than SCANSOURCE (SC3SG). The stock trades about -0.17 of its potential returns per unit of risk. The SCANSOURCE is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 5,000 in SCANSOURCE on October 17, 2024 and sell it today you would lose (180.00) from holding SCANSOURCE or give up 3.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. SCANSOURCE
Performance |
| Timeline |
| DAIRY FARM INTL |
| SCANSOURCE (SC3SG) |
DAIRY FARM and SCANSOURCE (SC3SG) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and SCANSOURCE (SC3SG)
The main advantage of trading using opposite DAIRY FARM and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM 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.| DAIRY FARM vs. TOMBADOR IRON LTD | DAIRY FARM vs. COLUMBIA SPORTSWEAR | DAIRY FARM vs. Gaming and Leisure | DAIRY FARM vs. Columbia Sportswear |
| SCANSOURCE (SC3SG) vs. GALENA MINING LTD | SCANSOURCE (SC3SG) vs. Easy Software AG | SCANSOURCE (SC3SG) vs. Jacquet Metal Service | SCANSOURCE (SC3SG) vs. ADRIATIC METALS LS 013355 |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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