Correlation Between GEELY AUTOMOBILE and ScanSource

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

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

Diversification Opportunities for GEELY AUTOMOBILE and ScanSource

0.59

Correlation Coefficient

GEELY AUTOMOBILE  ScanSource

Very weak diversification

The 3 months correlation between GEELY and ScanSource is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and ScanSource go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and ScanSource

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.25 times less return on investment than ScanSource. In addition to that, GEELY AUTOMOBILE is 1.48 times more volatile than ScanSource. It trades about 0.11 of its total potential returns per unit of risk. ScanSource is currently generating about 0.2 per unit of volatility. If you would invest  2,760  in ScanSource on April 14, 2025 and sell it today you would earn a total of  820.00  from holding ScanSource or generate 29.71% return on investment over 90 days.

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

GEELY AUTOMOBILE  vs.  ScanSource

GEELY AUTOMOBILE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GEELY AUTOMOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ScanSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEELY AUTOMOBILE and ScanSource

The main advantage of trading using opposite GEELY AUTOMOBILE and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.