Correlation Between Autohome ADR and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Autohome ADR and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Dow Jones Industrial, you can compare the effects of market volatilities on Autohome ADR and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome ADR and Dow Jones.
Diversification Opportunities for Autohome ADR and Dow Jones
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Autohome and Dow is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Autohome ADR i.e., Autohome ADR and Dow Jones go up and down completely randomly.
Pair Corralation between Autohome ADR and Dow Jones
Assuming the 90 days trading horizon Autohome ADR is expected to generate 4.07 times more return on investment than Dow Jones. However, Autohome ADR is 4.07 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.01 per unit of risk. If you would invest 2,473 in Autohome ADR on October 26, 2024 and sell it today you would earn a total of 67.00 from holding Autohome ADR or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Autohome ADR vs. Dow Jones Industrial
Performance |
| Timeline |
Autohome ADR and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Autohome ADR
Pair trading matchups for Autohome ADR
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Autohome ADR and Dow Jones
The main advantage of trading using opposite Autohome ADR and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome ADR position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Autohome ADR vs. Cass Information Systems | Autohome ADR vs. S E BANKEN A | Autohome ADR vs. Chiba Bank | Autohome ADR vs. CDN IMPERIAL BANK |
| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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