Correlation Between Cango and Kingsway Financial
Can any of the company-specific risk be diversified away by investing in both Cango and Kingsway Financial 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 Kingsway Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cango Inc and Kingsway Financial Services, you can compare the effects of market volatilities on Cango and Kingsway Financial 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 Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cango and Kingsway Financial.
Diversification Opportunities for Cango and Kingsway Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cango and Kingsway is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cango Inc and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Cango i.e., Cango and Kingsway Financial go up and down completely randomly.
Pair Corralation between Cango and Kingsway Financial
Given the investment horizon of 90 days Cango Inc is expected to generate 4.19 times more return on investment than Kingsway Financial. However, Cango is 4.19 times more volatile than Kingsway Financial Services. It trades about 0.27 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.06 per unit of risk. If you would invest 249.00 in Cango Inc on August 27, 2024 and sell it today you would earn a total of 132.00 from holding Cango Inc or generate 53.01% 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. Kingsway Financial Services
Performance |
| Timeline |
| Cango Inc |
| Kingsway Financial |
Cango and Kingsway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cango and Kingsway Financial
The main advantage of trading using opposite Cango and Kingsway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cango position performs unexpectedly, Kingsway Financial 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 Kingsway Financial will offset losses from the drop in Kingsway Financial's long position.| Cango vs. Cars Inc | Cango vs. KAR Auction Services | Cango vs. Rush Enterprises B | Cango vs. Rush Enterprises A |
| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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