Correlation Between Consumer Automotive and Kaixin Auto

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

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

Diversification Opportunities for Consumer Automotive and Kaixin Auto

0.0

Correlation Coefficient

Consumer Automotive  Kaixin Auto

Pay attention - limited upside

The 3 months correlation between Consumer and Kaixin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Automotive Finance and Kaixin Auto Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaixin Auto Holdings and Consumer Automotive 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 Consumer Automotive Finance are associated (or correlated) with Kaixin Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaixin Auto Holdings has no effect on the direction of Consumer Automotive i.e., Consumer Automotive and Kaixin Auto go up and down completely randomly.

Pair Corralation between Consumer Automotive and Kaixin Auto

If you would invest  426.00  in Kaixin Auto Holdings on September 5, 2024 and sell it today you would lose (243.00) from holding Kaixin Auto Holdings or give up 57.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Consumer Automotive Finance  vs.  Kaixin Auto Holdings

Consumer Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consumer Automotive Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Consumer Automotive is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kaixin Auto Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaixin Auto Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Kaixin Auto displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consumer Automotive and Kaixin Auto

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

The idea behind Consumer Automotive Finance and Kaixin Auto Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.