Correlation Between Uxin and CarGurus

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

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

Diversification Opportunities for Uxin and CarGurus

-0.15

Correlation Coefficient

Uxin  CarGurus

Good diversification

The 3 months correlation between Uxin and CarGurus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Uxin and CarGurus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarGurus and Uxin 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 Uxin are associated (or correlated) with CarGurus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarGurus has no effect on the direction of Uxin i.e., Uxin and CarGurus go up and down completely randomly.

Pair Corralation between Uxin and CarGurus

Given the investment horizon of 90 days Uxin is expected to generate 1.87 times more return on investment than CarGurus. However, Uxin is 1.87 times more volatile than CarGurus. It trades about 0.05 of its potential returns per unit of risk. CarGurus is currently generating about -0.1 per unit of risk. If you would invest  402.00  in Uxin on November 28, 2024 and sell it today you would earn a total of  34.00  from holding Uxin or generate 8.46% return on investment over 90 days.

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

Uxin  vs.  CarGurus

Uxin

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uxin are ranked lower than 4 (%) 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.

CarGurus

Risk-Adjusted Performance

Very Weak

Over the last 90 days CarGurus 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 basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Uxin and CarGurus

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

The idea behind Uxin and CarGurus 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.