Correlation Between Kaixin Auto and Group 1

Can any of the company-specific risk be diversified away by investing in both Kaixin Auto and Group 1 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 Group 1 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 Group 1 Automotive, you can compare the effects of market volatilities on Kaixin Auto and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kaixin Auto and Group 1.

Diversification Opportunities for Kaixin Auto and Group 1

-0.83

Correlation Coefficient

Kaixin Auto  Group 1

Pay attention - limited upside

The 3 months correlation between Kaixin and Group is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kaixin Auto Holdings and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Kaixin Auto i.e., Kaixin Auto and Group 1 go up and down completely randomly.

Pair Corralation between Kaixin Auto and Group 1

Given the investment horizon of 90 days Kaixin Auto is expected to generate 1.27 times less return on investment than Group 1. In addition to that, Kaixin Auto is 11.27 times more volatile than Group 1 Automotive. It trades about 0.02 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.35 per unit of volatility. If you would invest  41,846  in Group 1 Automotive on October 24, 2024 and sell it today you would earn a total of  2,915  from holding Group 1 Automotive or generate 6.97% return on investment over 90 days.

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

Kaixin Auto Holdings  vs.  Group 1 Automotive

Kaixin Auto Holdings

Risk-Adjusted Performance

0 of 100

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Group 1 Automotive

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Group 1 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaixin Auto and Group 1

The main advantage of trading using opposite Kaixin Auto and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaixin Auto position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Kaixin Auto Holdings and Group 1 Automotive 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.