Correlation Between ScanSource and Addtech AB
Can any of the company-specific risk be diversified away by investing in both ScanSource and Addtech AB 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 and Addtech AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Addtech AB, you can compare the effects of market volatilities on ScanSource and Addtech AB 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 with a short position of Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Addtech AB.
Diversification Opportunities for ScanSource and Addtech AB
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ScanSource and Addtech is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB and ScanSource 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 Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of ScanSource i.e., ScanSource and Addtech AB go up and down completely randomly.
Pair Corralation between ScanSource and Addtech AB
Assuming the 90 days horizon ScanSource is expected to under-perform the Addtech AB. In addition to that, ScanSource is 1.15 times more volatile than Addtech AB. It trades about -0.22 of its total potential returns per unit of risk. Addtech AB is currently generating about -0.25 per unit of volatility. If you would invest 2,916 in Addtech AB on January 2, 2025 and sell it today you would lose (288.00) from holding Addtech AB or give up 9.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Addtech AB
Performance |
| Timeline |
| ScanSource |
| Addtech AB |
ScanSource and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Addtech AB
The main advantage of trading using opposite ScanSource and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.| ScanSource vs. DICKS Sporting Goods | ||
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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 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.
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