Correlation Between China Conch and ScanSource

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

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

Diversification Opportunities for China Conch and ScanSource

0.2

Correlation Coefficient

China Conch  ScanSource

Modest diversification

The 3 months correlation between China and ScanSource is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Conch Venture and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and China Conch 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 China Conch Venture 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 China Conch i.e., China Conch and ScanSource go up and down completely randomly.

Pair Corralation between China Conch and ScanSource

Assuming the 90 days horizon China Conch Venture is expected to generate 1.68 times more return on investment than ScanSource. However, China Conch is 1.68 times more volatile than ScanSource. It trades about 0.14 of its potential returns per unit of risk. ScanSource is currently generating about 0.05 per unit of risk. If you would invest  91.00  in China Conch Venture on May 19, 2025 and sell it today you would earn a total of  26.00  from holding China Conch Venture or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

China Conch Venture  vs.  ScanSource

China Conch Venture

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Conch Venture are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, China Conch reported solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with China Conch and ScanSource

The main advantage of trading using opposite China Conch and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Conch 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 China Conch Venture 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.