Correlation Between Cazoo and Cango
Can any of the company-specific risk be diversified away by investing in both Cazoo 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 Cazoo and Cango into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cazoo Group and Cango Inc, you can compare the effects of market volatilities on Cazoo 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 Cazoo with a short position of Cango. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cazoo and Cango.
Diversification Opportunities for Cazoo and Cango
Very good diversification
The 3 months correlation between Cazoo and Cango is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cazoo Group and Cango Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cango Inc and Cazoo 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 Cazoo 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 Cazoo i.e., Cazoo and Cango go up and down completely randomly.
Pair Corralation between Cazoo and Cango
If you would invest 180.00 in Cango Inc on August 24, 2024 and sell it today you would earn a total of 210.00 from holding Cango Inc or generate 116.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Cazoo Group vs. Cango Inc
Performance |
| Timeline |
| Cazoo Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cango Inc |
Cazoo and Cango Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cazoo and Cango
The main advantage of trading using opposite Cazoo and Cango positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cazoo 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 Cazoo 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.| Cango vs. Cars Inc | Cango vs. KAR Auction Services | Cango vs. Rush Enterprises B | Cango vs. Rush Enterprises A |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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