Correlation Between CarMax and Jiuzi Holdings

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

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

Diversification Opportunities for CarMax and Jiuzi Holdings

-0.65

Correlation Coefficient

CarMax  Jiuzi Holdings

Excellent diversification

The 3 months correlation between CarMax and Jiuzi is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Jiuzi Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiuzi Holdings and CarMax 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 CarMax Inc are associated (or correlated) with Jiuzi Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiuzi Holdings has no effect on the direction of CarMax i.e., CarMax and Jiuzi Holdings go up and down completely randomly.

Pair Corralation between CarMax and Jiuzi Holdings

Considering the 90-day investment horizon CarMax Inc is expected to generate 0.22 times more return on investment than Jiuzi Holdings. However, CarMax Inc is 4.61 times less risky than Jiuzi Holdings. It trades about 0.07 of its potential returns per unit of risk. Jiuzi Holdings is currently generating about -0.11 per unit of risk. If you would invest  7,163  in CarMax Inc on June 21, 2024 and sell it today you would earn a total of  576.00  from holding CarMax Inc or generate 8.04% return on investment over 90 days.

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

CarMax Inc  vs.  Jiuzi Holdings

CarMax Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CarMax Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, CarMax may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Jiuzi Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiuzi Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in October 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CarMax and Jiuzi Holdings

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

The idea behind CarMax Inc and Jiuzi 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.