Correlation Between Kaixin Auto and AutoNation
Can any of the company-specific risk be diversified away by investing in both Kaixin Auto and AutoNation 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 Kaixin Auto and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kaixin Auto Holdings and AutoNation, you can compare the effects of market volatilities on Kaixin Auto and AutoNation 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 Kaixin Auto with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaixin Auto and AutoNation.
Diversification Opportunities for Kaixin Auto and AutoNation
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kaixin and AutoNation is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kaixin Auto Holdings and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Kaixin Auto 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 Kaixin Auto Holdings are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Kaixin Auto i.e., Kaixin Auto and AutoNation go up and down completely randomly.
Pair Corralation between Kaixin Auto and AutoNation
Given the investment horizon of 90 days Kaixin Auto Holdings is expected to under-perform the AutoNation. In addition to that, Kaixin Auto is 6.97 times more volatile than AutoNation. It trades about -0.34 of its total potential returns per unit of risk. AutoNation is currently generating about 0.16 per unit of volatility. If you would invest 16,706 in AutoNation on September 14, 2024 and sell it today you would earn a total of 785.00 from holding AutoNation or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kaixin Auto Holdings vs. AutoNation
Performance |
| Timeline |
| Kaixin Auto Holdings |
| AutoNation |
Kaixin Auto and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kaixin Auto and AutoNation
The main advantage of trading using opposite Kaixin Auto and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaixin Auto position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Kaixin Auto vs. AutoNation | Kaixin Auto vs. OReilly Automotive | Kaixin Auto vs. Advance Auto Parts | Kaixin Auto vs. Ross Stores |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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