Correlation Between ScanSource and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both ScanSource and KGHM Polska 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 KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and KGHM Polska Miedz, you can compare the effects of market volatilities on ScanSource and KGHM Polska 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 KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and KGHM Polska.
Diversification Opportunities for ScanSource and KGHM Polska
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ScanSource and KGHM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz 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 KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of ScanSource i.e., ScanSource and KGHM Polska go up and down completely randomly.
Pair Corralation between ScanSource and KGHM Polska
Assuming the 90 days horizon ScanSource is expected to generate 0.89 times more return on investment than KGHM Polska. However, ScanSource is 1.13 times less risky than KGHM Polska. It trades about 0.06 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.01 per unit of risk. If you would invest 4,760 in ScanSource on September 14, 2024 and sell it today you would earn a total of 100.00 from holding ScanSource or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. KGHM Polska Miedz
Performance |
| Timeline |
| ScanSource |
| KGHM Polska Miedz |
ScanSource and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and KGHM Polska
The main advantage of trading using opposite ScanSource and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, KGHM Polska 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 KGHM Polska will offset losses from the drop in KGHM Polska's long position.The idea behind ScanSource and KGHM Polska Miedz 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.| KGHM Polska vs. MOLSON RS BEVERAGE | KGHM Polska vs. ScanSource | KGHM Polska vs. Tsingtao Brewery | KGHM Polska vs. Suntory Beverage Food |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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