Correlation Between SCANSOURCE (SC3SG) and GigaMedia
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE (SC3SG) and GigaMedia 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 (SC3SG) and GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and GigaMedia, you can compare the effects of market volatilities on SCANSOURCE (SC3SG) and GigaMedia 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 (SC3SG) with a short position of GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE (SC3SG) and GigaMedia.
Diversification Opportunities for SCANSOURCE (SC3SG) and GigaMedia
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCANSOURCE and GigaMedia is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia and SCANSOURCE (SC3SG) 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 GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of SCANSOURCE (SC3SG) i.e., SCANSOURCE (SC3SG) and GigaMedia go up and down completely randomly.
Pair Corralation between SCANSOURCE (SC3SG) and GigaMedia
Assuming the 90 days trading horizon SCANSOURCE is expected to generate 1.59 times more return on investment than GigaMedia. However, SCANSOURCE (SC3SG) is 1.59 times more volatile than GigaMedia. It trades about 0.08 of its potential returns per unit of risk. GigaMedia is currently generating about 0.02 per unit of risk. If you would invest 2,840 in SCANSOURCE on September 4, 2024 and sell it today you would earn a total of 2,140 from holding SCANSOURCE or generate 75.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCANSOURCE vs. GigaMedia
Performance |
| Timeline |
| SCANSOURCE (SC3SG) |
| GigaMedia |
SCANSOURCE (SC3SG) and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE (SC3SG) and GigaMedia
The main advantage of trading using opposite SCANSOURCE (SC3SG) and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE (SC3SG) position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| SCANSOURCE (SC3SG) vs. TOTAL GABON | SCANSOURCE (SC3SG) vs. Walgreens Boots Alliance | SCANSOURCE (SC3SG) vs. Peak Resources Limited |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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