Correlation Between Kaixin Auto and AutoCanada

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

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

Diversification Opportunities for Kaixin Auto and AutoCanada

0.24

Correlation Coefficient

Kaixin Auto  AutoCanada

Modest diversification

The 3 months correlation between Kaixin and AutoCanada is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kaixin Auto Holdings and AutoCanada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoCanada and Kaixin Auto 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 Kaixin Auto Holdings are associated (or correlated) with AutoCanada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoCanada has no effect on the direction of Kaixin Auto i.e., Kaixin Auto and AutoCanada go up and down completely randomly.

Pair Corralation between Kaixin Auto and AutoCanada

Given the investment horizon of 90 days Kaixin Auto Holdings is expected to under-perform the AutoCanada. In addition to that, Kaixin Auto is 1.68 times more volatile than AutoCanada. It trades about -0.24 of its total potential returns per unit of risk. AutoCanada is currently generating about -0.02 per unit of volatility. If you would invest  1,187  in AutoCanada on December 30, 2024 and sell it today you would lose (52.00) from holding AutoCanada or give up 4.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Kaixin Auto Holdings  vs.  AutoCanada

Kaixin Auto Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaixin Auto Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

AutoCanada

Risk-Adjusted Performance

Very Weak

Over the last 90 days AutoCanada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, AutoCanada is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kaixin Auto and AutoCanada

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

The idea behind Kaixin Auto Holdings and AutoCanada 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.