Correlation Between Yunji and Kaixin Auto

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

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

Diversification Opportunities for Yunji and Kaixin Auto

0.67

Correlation Coefficient

Yunji  Kaixin Auto

Poor diversification

The 3 months correlation between Yunji and Kaixin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Yunji Inc 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 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 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 Yunji i.e., Yunji and Kaixin Auto go up and down completely randomly.

Pair Corralation between Yunji and Kaixin Auto

Allowing for the 90-day total investment horizon Yunji Inc is expected to under-perform the Kaixin Auto. But the stock apears to be less risky and, when comparing its historical volatility, Yunji Inc is 4.8 times less risky than Kaixin Auto. The stock trades about -0.01 of its potential returns per unit of risk. The Kaixin Auto Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  426.00  in Kaixin Auto Holdings on September 12, 2024 and sell it today you would lose (239.00) from holding Kaixin Auto Holdings or give up 56.1% of portfolio value over 90 days.

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

Yunji Inc  vs.  Kaixin Auto Holdings

Yunji Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yunji Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, Yunji is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Kaixin Auto Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaixin Auto Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Kaixin Auto displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yunji and Kaixin Auto

The main advantage of trading using opposite Yunji and Kaixin Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunji 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 Yunji Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.