Correlation Between XIAO I and ScanSource

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

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

Diversification Opportunities for XIAO I and ScanSource

-0.02

Correlation Coefficient

XIAO I  ScanSource

Good diversification

The 3 months correlation between XIAO and ScanSource is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding XIAO I American and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and XIAO I 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 XIAO I American 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 XIAO I i.e., XIAO I and ScanSource go up and down completely randomly.

Pair Corralation between XIAO I and ScanSource

Given the investment horizon of 90 days XIAO I American is expected to under-perform the ScanSource. In addition to that, XIAO I is 3.4 times more volatile than ScanSource. It trades about -0.04 of its total potential returns per unit of risk. ScanSource is currently generating about 0.04 per unit of volatility. If you would invest  3,204  in ScanSource on May 17, 2025 and sell it today you would earn a total of  1,186  from holding ScanSource or generate 37.02% return on investment over 90 days.

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

XIAO I American  vs.  ScanSource

XIAO I American

Risk-Adjusted Performance

Weakest

Over the last 90 days XIAO I American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

ScanSource

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with XIAO I and ScanSource

The main advantage of trading using opposite XIAO I and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XIAO I 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 XIAO I American 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.