Correlation Between ScanSource and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both ScanSource and CHINA EDUCATION 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 CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on ScanSource and CHINA EDUCATION 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 CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and CHINA EDUCATION.
Diversification Opportunities for ScanSource and CHINA EDUCATION
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between ScanSource and CHINA is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP 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 CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of ScanSource i.e., ScanSource and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between ScanSource and CHINA EDUCATION
Assuming the 90 days horizon ScanSource is expected to generate 2.08 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, ScanSource is 2.26 times less risky than CHINA EDUCATION. It trades about 0.05 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 |
ScanSource vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| ScanSource |
| CHINA EDUCATION GROUP |
ScanSource and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and CHINA EDUCATION
The main advantage of trading using opposite ScanSource and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| ScanSource vs. TreeHouse Foods | ScanSource vs. Astral Foods Limited | ScanSource vs. National Beverage Corp | ScanSource vs. CN MODERN DAIRY |
| CHINA EDUCATION vs. CENTURIA OFFICE REIT | CHINA EDUCATION vs. Tower One Wireless | CHINA EDUCATION vs. DFS Furniture PLC | CHINA EDUCATION vs. Beazer Homes USA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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