Correlation Between SunCar Technology and Cango

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

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

Diversification Opportunities for SunCar Technology and Cango

-0.31

Correlation Coefficient

SunCar Technology  Cango

Very good diversification

The 3 months correlation between SunCar and Cango is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SunCar Technology Group and Cango Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cango Inc and SunCar Technology 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 SunCar Technology Group are associated (or correlated) with Cango. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cango Inc has no effect on the direction of SunCar Technology i.e., SunCar Technology and Cango go up and down completely randomly.

Pair Corralation between SunCar Technology and Cango

Considering the 90-day investment horizon SunCar Technology Group is expected to under-perform the Cango. But the stock apears to be less risky and, when comparing its historical volatility, SunCar Technology Group is 1.56 times less risky than Cango. The stock trades about -0.02 of its potential returns per unit of risk. The Cango Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  157.00  in Cango Inc on September 17, 2024 and sell it today you would earn a total of  289.00  from holding Cango Inc or generate 184.08% return on investment over 90 days.

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

SunCar Technology Group  vs.  Cango Inc

SunCar Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunCar Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, SunCar Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Cango Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cango Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Cango reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunCar Technology and Cango

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

The idea behind SunCar Technology Group and Cango Inc 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 CEOs Directory module to screen CEOs from public companies around the world.