Correlation Between Atlas Copco and SCANSOURCE (SC3SG)

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

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

Diversification Opportunities for Atlas Copco and SCANSOURCE (SC3SG)

0.37

Correlation Coefficient

Atlas Copco  SCANSOURCE (SC3SG)

Weak diversification

The 3 months correlation between Atlas and SCANSOURCE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco A and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and Atlas Copco 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 Atlas Copco A 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 Atlas Copco i.e., Atlas Copco and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between Atlas Copco and SCANSOURCE (SC3SG)

Assuming the 90 days horizon Atlas Copco is expected to generate 199.0 times less return on investment than SCANSOURCE (SC3SG). In addition to that, Atlas Copco is 1.22 times more volatile than SCANSOURCE. It trades about 0.0 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.17 per unit of volatility. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Atlas Copco A  vs.  SCANSOURCE

Atlas Copco A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlas Copco A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Atlas Copco is not utilizing all of its potentials. The newest 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 Atlas Copco and SCANSOURCE (SC3SG)

The main advantage of trading using opposite Atlas Copco and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco 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 Atlas Copco A 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..