Correlation Between DAIDO METAL and Autohome
Can any of the company-specific risk be diversified away by investing in both DAIDO METAL 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 DAIDO METAL and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIDO METAL TD and Autohome ADR, you can compare the effects of market volatilities on DAIDO METAL 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 DAIDO METAL with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIDO METAL and Autohome.
Diversification Opportunities for DAIDO METAL and Autohome
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between DAIDO and Autohome is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding DAIDO METAL TD and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR and DAIDO METAL 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 DAIDO METAL TD 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 DAIDO METAL i.e., DAIDO METAL and Autohome go up and down completely randomly.
Pair Corralation between DAIDO METAL and Autohome
Assuming the 90 days horizon DAIDO METAL is expected to generate 5.43 times less return on investment than Autohome. But when comparing it to its historical volatility, DAIDO METAL TD is 2.35 times less risky than Autohome. It trades about 0.08 of its potential returns per unit of risk. Autohome ADR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,378 in Autohome ADR on October 23, 2024 and sell it today you would earn a total of 282.00 from holding Autohome ADR or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIDO METAL TD vs. Autohome ADR
Performance |
| Timeline |
| DAIDO METAL TD |
| Autohome ADR |
DAIDO METAL and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIDO METAL and Autohome
The main advantage of trading using opposite DAIDO METAL and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIDO METAL 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.| DAIDO METAL vs. Telecom Argentina SA | DAIDO METAL vs. HUTCHISON TELECOMM | DAIDO METAL vs. WisdomTree Investments | DAIDO METAL vs. China Communications Services |
| Autohome vs. Aluminum of | Autohome vs. G III Apparel Group | Autohome vs. DAIDO METAL TD | Autohome vs. SIERRA METALS |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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