Correlation Between Autohome ADR and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both Autohome ADR and HYDROFARM HLD 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 HYDROFARM HLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and HYDROFARM HLD GRP, you can compare the effects of market volatilities on Autohome ADR and HYDROFARM HLD 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 HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome ADR and HYDROFARM HLD.
Diversification Opportunities for Autohome ADR and HYDROFARM HLD
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Autohome and HYDROFARM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP 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 HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of Autohome ADR i.e., Autohome ADR and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between Autohome ADR and HYDROFARM HLD
Assuming the 90 days trading horizon Autohome ADR is expected to generate 0.42 times more return on investment than HYDROFARM HLD. However, Autohome ADR is 2.36 times less risky than HYDROFARM HLD. It trades about -0.1 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about -0.21 per unit of risk. If you would invest 2,600 in Autohome ADR on September 25, 2024 and sell it today you would lose (100.00) from holding Autohome ADR or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| Autohome ADR |
| HYDROFARM HLD GRP |
Autohome ADR and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome ADR and HYDROFARM HLD
The main advantage of trading using opposite Autohome ADR and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome ADR position performs unexpectedly, HYDROFARM HLD 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 HYDROFARM HLD will offset losses from the drop in HYDROFARM HLD's long position.| Autohome ADR vs. Alphabet Class A | Autohome ADR vs. Alphabet | Autohome ADR vs. Meta Platforms | Autohome ADR vs. Tencent Holdings Ltd |
| HYDROFARM HLD vs. Caterpillar | HYDROFARM HLD vs. Caterpillar | HYDROFARM HLD vs. Deere Company | HYDROFARM HLD vs. AB Volvo |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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