Correlation Between Autohome ADR and Sea
Can any of the company-specific risk be diversified away by investing in both Autohome ADR and Sea 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 Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Sea Limited, you can compare the effects of market volatilities on Autohome ADR and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome ADR and Sea.
Diversification Opportunities for Autohome ADR and Sea
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Autohome and Sea is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Limited has no effect on the direction of Autohome ADR i.e., Autohome ADR and Sea go up and down completely randomly.
Pair Corralation between Autohome ADR and Sea
Assuming the 90 days trading horizon Autohome ADR is expected to generate 1.91 times less return on investment than Sea. In addition to that, Autohome ADR is 2.14 times more volatile than Sea Limited. It trades about 0.03 of its total potential returns per unit of risk. Sea Limited is currently generating about 0.13 per unit of volatility. If you would invest 10,820 in Sea Limited on November 9, 2024 and sell it today you would earn a total of 920.00 from holding Sea Limited or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. Sea Limited
Performance |
| Timeline |
| Autohome ADR |
| Sea Limited |
Autohome ADR and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome ADR and Sea
The main advantage of trading using opposite Autohome ADR and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome ADR position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Autohome ADR vs. American Homes 4 | Autohome ADR vs. CREO MEDICAL GRP | Autohome ADR vs. DFS Furniture PLC | Autohome ADR vs. The Home Depot |
| Sea vs. COVIVIO HOTELS INH | Sea vs. Dalata Hotel Group | Sea vs. Playa Hotels Resorts | Sea vs. Endeavour Mining PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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