Correlation Between Neinor Homes and Autohome
Can any of the company-specific risk be diversified away by investing in both Neinor Homes and Autohome 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 Neinor Homes and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and Autohome ADR, you can compare the effects of market volatilities on Neinor Homes and Autohome 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 Neinor Homes with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Autohome.
Diversification Opportunities for Neinor Homes and Autohome
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Neinor and Autohome is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome ADR has no effect on the direction of Neinor Homes i.e., Neinor Homes and Autohome go up and down completely randomly.
Pair Corralation between Neinor Homes and Autohome
Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.59 times more return on investment than Autohome. However, Neinor Homes SA is 1.71 times less risky than Autohome. It trades about 0.01 of its potential returns per unit of risk. Autohome ADR is currently generating about -0.01 per unit of risk. If you would invest 1,494 in Neinor Homes SA on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Neinor Homes SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neinor Homes SA vs. Autohome ADR
Performance |
| Timeline |
| Neinor Homes SA |
| Autohome ADR |
Neinor Homes and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neinor Homes and Autohome
The main advantage of trading using opposite Neinor Homes and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes position performs unexpectedly, Autohome 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 Autohome will offset losses from the drop in Autohome's long position.| Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc |
| Autohome vs. DeVry Education Group | Autohome vs. Vulcan Materials | Autohome vs. CHINA EDUCATION GROUP | Autohome vs. STRAYER EDUCATION |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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