Correlation Between Uxin and Kingsway Financial

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

By analyzing existing cross correlation between Uxin and Kingsway Financial Services, you can compare the effects of market volatilities on Uxin and Kingsway Financial 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 Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uxin and Kingsway Financial.

Diversification Opportunities for Uxin and Kingsway Financial

0.61

Correlation Coefficient

Uxin  Kingsway Financial

Poor diversification

The 3 months correlation between Uxin and Kingsway is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Uxin and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Uxin i.e., Uxin and Kingsway Financial go up and down completely randomly.

Pair Corralation between Uxin and Kingsway Financial

Given the investment horizon of 90 days Uxin is expected to under-perform the Kingsway Financial. In addition to that, Uxin is 2.72 times more volatile than Kingsway Financial Services. It trades about -0.17 of its total potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.07 per unit of volatility. If you would invest  926.00  in Kingsway Financial Services on August 19, 2024 and sell it today you would lose (38.00) from holding Kingsway Financial Services or give up 4.1% of portfolio value over 90 days.

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

Uxin  vs.  Kingsway Financial Services

Uxin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uxin are ranked lower than 12 (%) 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.

Kingsway Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsway Financial Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Kingsway Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uxin and Kingsway Financial

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

The idea behind Uxin and Kingsway Financial Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.