Correlation Between Yunji and Asbury Automotive

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

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

Diversification Opportunities for Yunji and Asbury Automotive

0.03

Correlation Coefficient

Yunji  Asbury Automotive

Significant diversification

The 3 months correlation between Yunji and Asbury is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Yunji Inc and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Yunji 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 Yunji Inc are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Yunji i.e., Yunji and Asbury Automotive go up and down completely randomly.

Pair Corralation between Yunji and Asbury Automotive

Allowing for the 90-day total investment horizon Yunji Inc is expected to generate 1.7 times more return on investment than Asbury Automotive. However, Yunji is 1.7 times more volatile than Asbury Automotive Group. It trades about 0.06 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.04 per unit of risk. If you would invest  169.00  in Yunji Inc on December 27, 2024 and sell it today you would earn a total of  17.00  from holding Yunji Inc or generate 10.06% return on investment over 90 days.

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

Yunji Inc  vs.  Asbury Automotive Group

Yunji Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yunji Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Yunji revealed solid returns over the last few months and may actually be approaching a breakup point.

Asbury Automotive

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Yunji and Asbury Automotive

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

The idea behind Yunji Inc and Asbury Automotive Group 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..