Correlation Between Asbury Automotive and Mink Therapeutics

Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Mink Therapeutics 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 Mink Therapeutics 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 Mink Therapeutics, you can compare the effects of market volatilities on Asbury Automotive and Mink Therapeutics 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 Mink Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Mink Therapeutics.

Diversification Opportunities for Asbury Automotive and Mink Therapeutics

-0.13

Correlation Coefficient

Asbury Automotive  Mink Therapeutics

Good diversification

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

Pair Corralation between Asbury Automotive and Mink Therapeutics

Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.4 times more return on investment than Mink Therapeutics. However, Asbury Automotive Group is 2.49 times less risky than Mink Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Mink Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  17,250  in Asbury Automotive Group on September 16, 2024 and sell it today you would earn a total of  8,122  from holding Asbury Automotive Group or generate 47.08% 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.  Mink Therapeutics

Asbury Automotive

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Asbury Automotive reported solid returns over the last few months and may actually be approaching a breakup point.

Mink Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mink Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Asbury Automotive and Mink Therapeutics

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

The idea behind Asbury Automotive Group and Mink Therapeutics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.