Correlation Between Autohome ADR and Dell Technologies
Can any of the company-specific risk be diversified away by investing in both Autohome ADR and Dell Technologies 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 Autohome ADR and Dell Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Dell Technologies, you can compare the effects of market volatilities on Autohome ADR and Dell Technologies 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 Autohome ADR with a short position of Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome ADR and Dell Technologies.
Diversification Opportunities for Autohome ADR and Dell Technologies
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Autohome and Dell is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies and Autohome ADR 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 Autohome ADR are associated (or correlated) with Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Autohome ADR i.e., Autohome ADR and Dell Technologies go up and down completely randomly.
Pair Corralation between Autohome ADR and Dell Technologies
Assuming the 90 days trading horizon Autohome ADR is expected to generate 3.49 times less return on investment than Dell Technologies. But when comparing it to its historical volatility, Autohome ADR is 1.63 times less risky than Dell Technologies. It trades about 0.03 of its potential returns per unit of risk. Dell Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,453 in Dell Technologies on September 14, 2024 and sell it today you would earn a total of 4,677 from holding Dell Technologies or generate 72.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. Dell Technologies
Performance |
| Timeline |
| Autohome ADR |
| Dell Technologies |
Autohome ADR and Dell Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome ADR and Dell Technologies
The main advantage of trading using opposite Autohome ADR and Dell Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome ADR position performs unexpectedly, Dell Technologies 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 Dell Technologies will offset losses from the drop in Dell Technologies' long position.| Autohome ADR vs. WT OFFSHORE | Autohome ADR vs. RYU Apparel | Autohome ADR vs. American Eagle Outfitters | Autohome ADR vs. Columbia Sportswear |
| Dell Technologies vs. LEGACY IRON ORE | Dell Technologies vs. HomeToGo SE | Dell Technologies vs. Autohome ADR | Dell Technologies vs. United States Steel |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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