Correlation Between ScanSource and China Aircraft

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Can any of the company-specific risk be diversified away by investing in both ScanSource and China Aircraft 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 China Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and China Aircraft Leasing, you can compare the effects of market volatilities on ScanSource and China Aircraft 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 China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and China Aircraft.

Diversification Opportunities for ScanSource and China Aircraft

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between ScanSource and China is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing 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 China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of ScanSource i.e., ScanSource and China Aircraft go up and down completely randomly.

Pair Corralation between ScanSource and China Aircraft

Given the investment horizon of 90 days ScanSource is expected to generate 2.35 times less return on investment than China Aircraft. In addition to that, ScanSource is 1.79 times more volatile than China Aircraft Leasing. It trades about 0.03 of its total potential returns per unit of risk. China Aircraft Leasing is currently generating about 0.13 per unit of volatility. If you would invest  44.00  in China Aircraft Leasing on May 14, 2025 and sell it today you would earn a total of  3.00  from holding China Aircraft Leasing or generate 6.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

ScanSource  vs.  China Aircraft Leasing

 Performance 
       Timeline  
ScanSource 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
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. 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.
China Aircraft Leasing 

Risk-Adjusted Performance

Fair

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in China Aircraft Leasing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, China Aircraft may actually be approaching a critical reversion point that can send shares even higher in September 2025.

ScanSource and China Aircraft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ScanSource and China Aircraft

The main advantage of trading using opposite ScanSource and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft's long position.
The idea behind ScanSource and China Aircraft Leasing 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.
Check out your portfolio center.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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