Correlation Between Zhongsheng Group and CarMax
Can any of the company-specific risk be diversified away by investing in both Zhongsheng Group and CarMax 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 Zhongsheng Group and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhongsheng Group Holdings and CarMax Inc, you can compare the effects of market volatilities on Zhongsheng Group and CarMax 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 Zhongsheng Group with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongsheng Group and CarMax.
Diversification Opportunities for Zhongsheng Group and CarMax
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhongsheng and CarMax is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Zhongsheng Group 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 Zhongsheng Group Holdings are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Zhongsheng Group i.e., Zhongsheng Group and CarMax go up and down completely randomly.
Pair Corralation between Zhongsheng Group and CarMax
Assuming the 90 days horizon Zhongsheng Group Holdings is expected to generate 5.11 times more return on investment than CarMax. However, Zhongsheng Group is 5.11 times more volatile than CarMax Inc. It trades about 0.09 of its potential returns per unit of risk. CarMax Inc is currently generating about 0.09 per unit of risk. If you would invest 74.00 in Zhongsheng Group Holdings on September 24, 2024 and sell it today you would earn a total of 108.00 from holding Zhongsheng Group Holdings or generate 145.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhongsheng Group Holdings vs. CarMax Inc
Performance |
| Timeline |
| Zhongsheng Group Holdings |
| CarMax Inc |
Zhongsheng Group and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhongsheng Group and CarMax
The main advantage of trading using opposite Zhongsheng Group and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongsheng Group position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax's long position.| Zhongsheng Group vs. Copart Inc | Zhongsheng Group vs. CarMax Inc | Zhongsheng Group vs. DIeteren Group SA | Zhongsheng Group vs. Penske Automotive Group |
| CarMax vs. Copart Inc | CarMax vs. Zhongsheng Group Holdings | CarMax vs. DIeteren Group SA | CarMax vs. Penske Automotive Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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