Correlation Between SunCar Technology and AutoZone

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

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

Diversification Opportunities for SunCar Technology and AutoZone

0.06

Correlation Coefficient

SunCar Technology  AutoZone

Significant diversification

The 3 months correlation between SunCar and AutoZone is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SunCar Technology Group and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and SunCar Technology 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 SunCar Technology Group are associated (or correlated) with AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of SunCar Technology i.e., SunCar Technology and AutoZone go up and down completely randomly.

Pair Corralation between SunCar Technology and AutoZone

Considering the 90-day investment horizon SunCar Technology Group is expected to generate 7.35 times more return on investment than AutoZone. However, SunCar Technology is 7.35 times more volatile than AutoZone. It trades about 0.04 of its potential returns per unit of risk. AutoZone is currently generating about 0.06 per unit of risk. If you would invest  1,014  in SunCar Technology Group on February 17, 2024 and sell it today you would lose (216.00) from holding SunCar Technology Group or give up 21.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

SunCar Technology Group  vs.  AutoZone

SunCar Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunCar Technology Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, SunCar Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

AutoZone

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with SunCar Technology and AutoZone

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

The idea behind SunCar Technology Group and AutoZone 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .