Correlation Between Kandi Technologies and ScanSource

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

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

Diversification Opportunities for Kandi Technologies and ScanSource

-0.5

Correlation Coefficient

Kandi Technologies  ScanSource

Very good diversification

The 3 months correlation between Kandi and ScanSource is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kandi Technologies Group and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Kandi Technologies 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 Kandi Technologies Group 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 Kandi Technologies i.e., Kandi Technologies and ScanSource go up and down completely randomly.

Pair Corralation between Kandi Technologies and ScanSource

Given the investment horizon of 90 days Kandi Technologies Group is expected to under-perform the ScanSource. In addition to that, Kandi Technologies is 1.93 times more volatile than ScanSource. It trades about -0.18 of its total potential returns per unit of risk. ScanSource is currently generating about 0.01 per unit of volatility. If you would invest  4,757  in ScanSource on September 23, 2024 and sell it today you would earn a total of  1.00  from holding ScanSource or generate 0.02% return on investment over 90 days.

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

Kandi Technologies Group  vs.  ScanSource

Kandi Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kandi Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

ScanSource

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kandi Technologies and ScanSource

The main advantage of trading using opposite Kandi Technologies and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kandi Technologies 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 Kandi Technologies Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.