Correlation Between Aozora Bank and ScanSource

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

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

Diversification Opportunities for Aozora Bank and ScanSource

-0.19

Correlation Coefficient

Aozora Bank  ScanSource

Good diversification

The 3 months correlation between Aozora and ScanSource is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Aozora Bank 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 Aozora Bank 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 Aozora Bank i.e., Aozora Bank and ScanSource go up and down completely randomly.

Pair Corralation between Aozora Bank and ScanSource

Assuming the 90 days horizon Aozora Bank is expected to generate 1.54 times less return on investment than ScanSource. But when comparing it to its historical volatility, Aozora Bank is 1.2 times less risky than ScanSource. It trades about 0.06 of its potential returns per unit of risk. ScanSource is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,560  in ScanSource on May 19, 2025 and sell it today you would earn a total of  280.00  from holding ScanSource or generate 7.87% return on investment over 90 days.

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

Aozora Bank  vs.  ScanSource

Aozora Bank

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Aozora Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aozora Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ScanSource

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Aozora Bank and ScanSource

The main advantage of trading using opposite Aozora Bank and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aozora Bank 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 Aozora Bank 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.