Correlation Between Asbury Automotive and Cirmaker Technology

Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Cirmaker 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 Asbury Automotive and Cirmaker Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asbury Automotive Group and Cirmaker Technology, you can compare the effects of market volatilities on Asbury Automotive and Cirmaker 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 Asbury Automotive with a short position of Cirmaker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Cirmaker Technology.

Diversification Opportunities for Asbury Automotive and Cirmaker Technology

-0.13

Correlation Coefficient

Asbury Automotive  Cirmaker Technology

Good diversification

The 3 months correlation between Asbury and Cirmaker is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology and Asbury 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 Asbury Automotive Group are associated (or correlated) with Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Cirmaker Technology go up and down completely randomly.

Pair Corralation between Asbury Automotive and Cirmaker Technology

Considering the 90-day investment horizon Asbury Automotive is expected to generate 50.39 times less return on investment than Cirmaker Technology. But when comparing it to its historical volatility, Asbury Automotive Group is 28.5 times less risky than Cirmaker Technology. It trades about 0.03 of its potential returns per unit of risk. Cirmaker Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Cirmaker Technology on October 3, 2024 and sell it today you would earn a total of  5.39  from holding Cirmaker Technology or generate 53900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Asbury Automotive Group  vs.  Cirmaker Technology

Asbury Automotive

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cirmaker Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirmaker Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Cirmaker Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Asbury Automotive and Cirmaker Technology

The main advantage of trading using opposite Asbury Automotive and Cirmaker Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Cirmaker 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 Cirmaker Technology will offset losses from the drop in Cirmaker Technology's long position.

The idea behind Asbury Automotive Group and Cirmaker Technology 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.