Correlation Between ScanSource and AptarGroup

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

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

Diversification Opportunities for ScanSource and AptarGroup

0.45

Correlation Coefficient

ScanSource  AptarGroup

Very weak diversification

The 3 months correlation between ScanSource and AptarGroup is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and ScanSource 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 ScanSource are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of ScanSource i.e., ScanSource and AptarGroup go up and down completely randomly.

Pair Corralation between ScanSource and AptarGroup

Given the investment horizon of 90 days ScanSource is expected to generate 0.94 times more return on investment than AptarGroup. However, ScanSource is 1.06 times less risky than AptarGroup. It trades about -0.01 of its potential returns per unit of risk. AptarGroup is currently generating about -0.07 per unit of risk. If you would invest  4,206  in ScanSource on May 13, 2025 and sell it today you would lose (74.00) from holding ScanSource or give up 1.76% of portfolio value over 90 days.

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

ScanSource  vs.  AptarGroup

ScanSource

Risk-Adjusted Performance

Weakest

Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

AptarGroup

Risk-Adjusted Performance

Weakest

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ScanSource and AptarGroup

The main advantage of trading using opposite ScanSource and AptarGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, AptarGroup 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 AptarGroup will offset losses from the drop in AptarGroup's long position.

The idea behind ScanSource and AptarGroup 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.