Correlation Between Lear and Uxin
Can any of the company-specific risk be diversified away by investing in both Lear and Uxin 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 Lear and Uxin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lear Corporation and Uxin, you can compare the effects of market volatilities on Lear and Uxin 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 Lear with a short position of Uxin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lear and Uxin.
Diversification Opportunities for Lear and Uxin
Very good diversification
The 3 months correlation between Lear and Uxin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and Uxin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uxin and Lear 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 Lear Corporation are associated (or correlated) with Uxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uxin has no effect on the direction of Lear i.e., Lear and Uxin go up and down completely randomly.
Pair Corralation between Lear and Uxin
Considering the 90-day investment horizon Lear Corporation is expected to under-perform the Uxin. But the stock apears to be less risky and, when comparing its historical volatility, Lear Corporation is 4.96 times less risky than Uxin. The stock trades about -0.04 of its potential returns per unit of risk. The Uxin is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,430 in Uxin on August 31, 2024 and sell it today you would lose (1,028) from holding Uxin or give up 71.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lear Corp. vs. Uxin
Performance |
| Timeline |
| Lear |
| Uxin |
Lear and Uxin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lear and Uxin
The main advantage of trading using opposite Lear and Uxin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lear position performs unexpectedly, Uxin 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 Uxin will offset losses from the drop in Uxin's long position.The idea behind Lear Corporation and Uxin 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.| Uxin vs. Kingsway Financial Services | Uxin vs. KAR Auction Services | Uxin vs. Cango Inc | Uxin 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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