Correlation Between GBS Software and ScanSource

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

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

Diversification Opportunities for GBS Software and ScanSource

0.3

Correlation Coefficient

GBS Software  ScanSource

Weak diversification

The 3 months correlation between GBS and ScanSource is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and GBS Software 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 GBS Software AG 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 GBS Software i.e., GBS Software and ScanSource go up and down completely randomly.

Pair Corralation between GBS Software and ScanSource

Assuming the 90 days trading horizon GBS Software is expected to generate 1.16 times less return on investment than ScanSource. In addition to that, GBS Software is 1.3 times more volatile than ScanSource. It trades about 0.13 of its total potential returns per unit of risk. ScanSource is currently generating about 0.2 per unit of volatility. If you would invest  2,700  in ScanSource on April 20, 2025 and sell it today you would earn a total of  760.00  from holding ScanSource or generate 28.15% return on investment over 90 days.

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

GBS Software AG  vs.  ScanSource

GBS Software AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GBS Software AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GBS Software 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 uncertain basic indicators, ScanSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GBS Software and ScanSource

The main advantage of trading using opposite GBS Software and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software 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 GBS Software AG 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.