Correlation Between Cango and Group 1
Can any of the company-specific risk be diversified away by investing in both Cango and Group 1 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 Cango and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cango Inc and Group 1 Automotive, you can compare the effects of market volatilities on Cango and Group 1 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 Cango with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cango and Group 1.
Diversification Opportunities for Cango and Group 1
Poor diversification
The 3 months correlation between Cango and Group is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cango Inc and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Cango 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 Cango Inc are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Cango i.e., Cango and Group 1 go up and down completely randomly.
Pair Corralation between Cango and Group 1
Given the investment horizon of 90 days Cango Inc is expected to generate 1.95 times more return on investment than Group 1. However, Cango is 1.95 times more volatile than Group 1 Automotive. It trades about 0.1 of its potential returns per unit of risk. Group 1 Automotive is currently generating about 0.09 per unit of risk. If you would invest 106.00 in Cango Inc on August 29, 2024 and sell it today you would earn a total of 284.00 from holding Cango Inc or generate 267.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cango Inc vs. Group 1 Automotive
Performance |
| Timeline |
| Cango Inc |
| Group 1 Automotive |
Cango and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cango and Group 1
The main advantage of trading using opposite Cango and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cango position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| Cango vs. Cars Inc | Cango vs. KAR Auction Services | Cango vs. Rush Enterprises B | Cango vs. Rush Enterprises A |
| Group 1 vs. Kingsway Financial Services | Group 1 vs. KAR Auction Services | Group 1 vs. Cango Inc | Group 1 vs. Vroom Inc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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