Correlation Between AutoCanada and Uxin

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

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

Diversification Opportunities for AutoCanada and Uxin

0.44

Correlation Coefficient

AutoCanada  Uxin

Very weak diversification

The 3 months correlation between AutoCanada and Uxin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AutoCanada and Uxin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uxin and AutoCanada 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 AutoCanada 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 AutoCanada i.e., AutoCanada and Uxin go up and down completely randomly.

Pair Corralation between AutoCanada and Uxin

Assuming the 90 days horizon AutoCanada is expected to generate 0.59 times more return on investment than Uxin. However, AutoCanada is 1.69 times less risky than Uxin. It trades about 0.08 of its potential returns per unit of risk. Uxin is currently generating about 0.04 per unit of risk. If you would invest  1,192  in AutoCanada on December 2, 2024 and sell it today you would earn a total of  89.00  from holding AutoCanada or generate 7.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	62.3%
Values	Daily Returns

AutoCanada  vs.  Uxin

AutoCanada

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AutoCanada are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, AutoCanada reported solid returns over the last few months and may actually be approaching a breakup point.

Uxin

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uxin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Uxin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AutoCanada and Uxin

The main advantage of trading using opposite AutoCanada and Uxin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoCanada 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 AutoCanada 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.