Correlation Between Taitron Components and ScanSource

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

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

Diversification Opportunities for Taitron Components and ScanSource

0.65

Correlation Coefficient

Taitron Components  ScanSource

Poor diversification

The 3 months correlation between Taitron and ScanSource is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Taitron Components Incorporate and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Taitron Components 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 Taitron Components Incorporated 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 Taitron Components i.e., Taitron Components and ScanSource go up and down completely randomly.

Pair Corralation between Taitron Components and ScanSource

Given the investment horizon of 90 days Taitron Components is expected to generate 3.5 times less return on investment than ScanSource. But when comparing it to its historical volatility, Taitron Components Incorporated is 1.13 times less risky than ScanSource. It trades about 0.02 of its potential returns per unit of risk. ScanSource is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,592  in ScanSource on May 6, 2025 and sell it today you would earn a total of  186.00  from holding ScanSource or generate 5.18% return on investment over 90 days.

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

Taitron Components Incorporate  vs.  ScanSource

Taitron Components

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taitron Components Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Taitron Components is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

ScanSource

Risk-Adjusted Performance

Insignificant

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Taitron Components and ScanSource

The main advantage of trading using opposite Taitron Components and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taitron Components 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 Taitron Components Incorporated 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.