Correlation Between Sonic Automotive and Naas Technology
Can any of the company-specific risk be diversified away by investing in both Sonic Automotive and Naas Technology 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 Sonic Automotive and Naas Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Automotive and Naas Technology ADR, you can compare the effects of market volatilities on Sonic Automotive and Naas Technology 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 Sonic Automotive with a short position of Naas Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Automotive and Naas Technology.
Diversification Opportunities for Sonic Automotive and Naas Technology
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sonic and Naas is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Automotive and Naas Technology ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naas Technology ADR and Sonic Automotive 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 Sonic Automotive are associated (or correlated) with Naas Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naas Technology ADR has no effect on the direction of Sonic Automotive i.e., Sonic Automotive and Naas Technology go up and down completely randomly.
Pair Corralation between Sonic Automotive and Naas Technology
Considering the 90-day investment horizon Sonic Automotive is expected to generate 0.22 times more return on investment than Naas Technology. However, Sonic Automotive is 4.63 times less risky than Naas Technology. It trades about 0.07 of its potential returns per unit of risk. Naas Technology ADR is currently generating about -0.07 per unit of risk. If you would invest 5,222 in Sonic Automotive on November 3, 2024 and sell it today you would earn a total of 2,203 from holding Sonic Automotive or generate 42.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Automotive vs. Naas Technology ADR
Performance |
| Timeline |
| Sonic Automotive |
| Naas Technology ADR |
Sonic Automotive and Naas Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Automotive and Naas Technology
The main advantage of trading using opposite Sonic Automotive and Naas Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Automotive position performs unexpectedly, Naas Technology 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 Naas Technology will offset losses from the drop in Naas Technology's long position.| Sonic Automotive vs. Lithia Motors | Sonic Automotive vs. AutoNation | Sonic Automotive vs. Asbury Automotive Group | Sonic Automotive vs. Penske Automotive Group |
| Naas Technology vs. Leslies | Naas Technology vs. Sally Beauty Holdings | Naas Technology vs. ODP Corp | Naas Technology vs. 1 800 FLOWERSCOM |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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