Correlation Between SunCar Technology and AutoNation

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

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

Diversification Opportunities for SunCar Technology and AutoNation

0.1

Correlation Coefficient

SunCar Technology  AutoNation

Average diversification

The 3 months correlation between SunCar and AutoNation is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SunCar Technology Group and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and SunCar Technology 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 SunCar Technology Group are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of SunCar Technology i.e., SunCar Technology and AutoNation go up and down completely randomly.

Pair Corralation between SunCar Technology and AutoNation

Considering the 90-day investment horizon SunCar Technology Group is expected to under-perform the AutoNation. In addition to that, SunCar Technology is 3.28 times more volatile than AutoNation. It trades about -0.18 of its total potential returns per unit of risk. AutoNation is currently generating about -0.02 per unit of volatility. If you would invest  16,872  in AutoNation on December 29, 2024 and sell it today you would lose (545.00) from holding AutoNation or give up 3.23% of portfolio value over 90 days.

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

SunCar Technology Group  vs.  AutoNation

SunCar Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunCar Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AutoNation

Risk-Adjusted Performance

Very Weak

Over the last 90 days AutoNation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AutoNation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SunCar Technology and AutoNation

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

The idea behind SunCar Technology Group and AutoNation 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.