Correlation Between Alfa Financial and ScanSource

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

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

Diversification Opportunities for Alfa Financial and ScanSource

0.09

Correlation Coefficient

Alfa Financial  ScanSource

Significant diversification

The 3 months correlation between Alfa and ScanSource is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and ScanSource go up and down completely randomly.

Pair Corralation between Alfa Financial and ScanSource

Assuming the 90 days trading horizon Alfa Financial is expected to generate 7.03 times less return on investment than ScanSource. In addition to that, Alfa Financial is 1.16 times more volatile than ScanSource. It trades about 0.02 of its total potential returns per unit of risk. ScanSource is currently generating about 0.13 per unit of volatility. If you would invest  3,000  in ScanSource on May 3, 2025 and sell it today you would earn a total of  520.00  from holding ScanSource or generate 17.33% return on investment over 90 days.

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

Alfa Financial Software  vs.  ScanSource

Alfa Financial Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Financial 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 10 (%) 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 Alfa Financial and ScanSource

The main advantage of trading using opposite Alfa Financial and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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 Alfa Financial Software 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.