Correlation Between BANK RAKYAT and SCANSOURCE

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

By analyzing existing cross correlation between BANK RAKYAT IND and SCANSOURCE, you can compare the effects of market volatilities on BANK RAKYAT and SCANSOURCE 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 BANK RAKYAT with a short position of SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and SCANSOURCE.

Diversification Opportunities for BANK RAKYAT and SCANSOURCE

0.24

Correlation Coefficient

BANK RAKYAT  SCANSOURCE

Modest diversification

The 3 months correlation between BANK and SCANSOURCE is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE and BANK RAKYAT 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 BANK RAKYAT IND are associated (or correlated) with SCANSOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and SCANSOURCE go up and down completely randomly.

Pair Corralation between BANK RAKYAT and SCANSOURCE

Assuming the 90 days trading horizon BANK RAKYAT is expected to generate 3.57 times less return on investment than SCANSOURCE. In addition to that, BANK RAKYAT is 2.14 times more volatile than SCANSOURCE. It trades about 0.02 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.15 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  620.00  from holding SCANSOURCE or generate 21.83% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  SCANSOURCE

BANK RAKYAT IND

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BANK RAKYAT IND are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BANK RAKYAT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SCANSOURCE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SCANSOURCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and SCANSOURCE

The main advantage of trading using opposite BANK RAKYAT and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, SCANSOURCE 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 will offset losses from the drop in SCANSOURCE's long position.

The idea behind BANK RAKYAT IND 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.