Correlation Between Autohome ADR and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both Autohome ADR and LANDSEA HOMES 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 LANDSEA HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and LANDSEA HOMES P, you can compare the effects of market volatilities on Autohome ADR and LANDSEA HOMES 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 LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome ADR and LANDSEA HOMES.
Diversification Opportunities for Autohome ADR and LANDSEA HOMES
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Autohome and LANDSEA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P 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 LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of Autohome ADR i.e., Autohome ADR and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between Autohome ADR and LANDSEA HOMES
Assuming the 90 days trading horizon Autohome ADR is expected to generate 0.6 times more return on investment than LANDSEA HOMES. However, Autohome ADR is 1.66 times less risky than LANDSEA HOMES. It trades about -0.1 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about -0.31 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. LANDSEA HOMES P
Performance |
| Timeline |
| Autohome ADR |
| LANDSEA HOMES P |
Autohome ADR and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome ADR and LANDSEA HOMES
The main advantage of trading using opposite Autohome ADR and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome ADR position performs unexpectedly, LANDSEA HOMES 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 LANDSEA HOMES will offset losses from the drop in LANDSEA HOMES's long position.| Autohome ADR vs. Alphabet Class A | Autohome ADR vs. Alphabet | Autohome ADR vs. Meta Platforms | Autohome ADR vs. Tencent Holdings Ltd |
| LANDSEA HOMES vs. Deutsche Wohnen SE | LANDSEA HOMES vs. Gateway Real Estate | LANDSEA HOMES vs. TIMES CHINA HLDGS | LANDSEA HOMES vs. Greenland Hong Kong |
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 CEOs Directory module to screen CEOs from public companies around the world.
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