Correlation Between Winmark and Kaixin Auto

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

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

Diversification Opportunities for Winmark and Kaixin Auto

-0.77

Correlation Coefficient

Winmark  Kaixin Auto

Pay attention - limited upside

The 3 months correlation between Winmark and Kaixin is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Kaixin Auto Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaixin Auto Holdings and Winmark 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 Winmark are associated (or correlated) with Kaixin Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaixin Auto Holdings has no effect on the direction of Winmark i.e., Winmark and Kaixin Auto go up and down completely randomly.

Pair Corralation between Winmark and Kaixin Auto

Given the investment horizon of 90 days Winmark is expected to generate 0.13 times more return on investment than Kaixin Auto. However, Winmark is 7.83 times less risky than Kaixin Auto. It trades about 0.06 of its potential returns per unit of risk. Kaixin Auto Holdings is currently generating about -0.02 per unit of risk. If you would invest  26,836  in Winmark on September 27, 2024 and sell it today you would earn a total of  13,664  from holding Winmark or generate 50.92% return on investment over 90 days.

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

Winmark  vs.  Kaixin Auto Holdings

Winmark

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Winmark are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Winmark may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kaixin Auto Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaixin Auto Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Kaixin Auto displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winmark and Kaixin Auto

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

The idea behind Winmark and Kaixin Auto Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..