Correlation Between AUTO TRADER and SCANSOURCE (SC3SG)

Can any of the company-specific risk be diversified away by investing in both AUTO TRADER 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 AUTO TRADER and SCANSOURCE (SC3SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AUTO TRADER ADR and SCANSOURCE, you can compare the effects of market volatilities on AUTO TRADER 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 AUTO TRADER with a short position of SCANSOURCE (SC3SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and SCANSOURCE (SC3SG).

Diversification Opportunities for AUTO TRADER and SCANSOURCE (SC3SG)

0.19

Correlation Coefficient

AUTO TRADER  SCANSOURCE (SC3SG)

Average diversification

The 3 months correlation between AUTO and SCANSOURCE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and AUTO TRADER 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 AUTO TRADER ADR 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 AUTO TRADER i.e., AUTO TRADER and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between AUTO TRADER and SCANSOURCE (SC3SG)

Assuming the 90 days trading horizon AUTO TRADER is expected to generate 5.68 times less return on investment than SCANSOURCE (SC3SG). But when comparing it to its historical volatility, AUTO TRADER ADR is 1.08 times less risky than SCANSOURCE (SC3SG). It trades about 0.03 of its potential returns per unit of risk. SCANSOURCE is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,840  in SCANSOURCE on April 24, 2025 and sell it today you would earn a total of  680.00  from holding SCANSOURCE or generate 23.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AUTO TRADER ADR  vs.  SCANSOURCE

AUTO TRADER ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AUTO TRADER ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AUTO TRADER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SCANSOURCE (SC3SG)

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SCANSOURCE (SC3SG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUTO TRADER and SCANSOURCE (SC3SG)

The main advantage of trading using opposite AUTO TRADER and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTO TRADER 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.

The idea behind AUTO TRADER ADR and SCANSOURCE 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.