Correlation Between MEMSCAP SA and ScanSource

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

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

Diversification Opportunities for MEMSCAP SA and ScanSource

-0.06

Correlation Coefficient

MEMSCAP SA  ScanSource

Good diversification

The 3 months correlation between MEMSCAP and ScanSource is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding MEMSCAP SA and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and MEMSCAP SA 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 MEMSCAP SA 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 MEMSCAP SA i.e., MEMSCAP SA and ScanSource go up and down completely randomly.

Pair Corralation between MEMSCAP SA and ScanSource

Assuming the 90 days trading horizon MEMSCAP SA is expected to generate 2.02 times more return on investment than ScanSource. However, MEMSCAP SA is 2.02 times more volatile than ScanSource. It trades about 0.06 of its potential returns per unit of risk. ScanSource is currently generating about 0.03 per unit of risk. If you would invest  370.00  in MEMSCAP SA on May 16, 2025 and sell it today you would earn a total of  40.00  from holding MEMSCAP SA or generate 10.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

MEMSCAP SA  vs.  ScanSource

MEMSCAP SA

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in MEMSCAP SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, MEMSCAP SA reported solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ScanSource is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MEMSCAP SA and ScanSource

The main advantage of trading using opposite MEMSCAP SA and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEMSCAP SA 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 MEMSCAP SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.