Correlation Between Autohome and Arcosa
Can any of the company-specific risk be diversified away by investing in both Autohome and Arcosa 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 and Arcosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Arcosa Inc, you can compare the effects of market volatilities on Autohome and Arcosa 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 with a short position of Arcosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Arcosa.
Diversification Opportunities for Autohome and Arcosa
Average diversification
The 3 months correlation between Autohome and Arcosa is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa Inc and Autohome 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 Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of Autohome i.e., Autohome and Arcosa go up and down completely randomly.
Pair Corralation between Autohome and Arcosa
Assuming the 90 days trading horizon Autohome ADR is expected to under-perform the Arcosa. In addition to that, Autohome is 1.18 times more volatile than Arcosa Inc. It trades about 0.0 of its total potential returns per unit of risk. Arcosa Inc is currently generating about 0.08 per unit of volatility. If you would invest 4,931 in Arcosa Inc on August 31, 2024 and sell it today you would earn a total of 5,169 from holding Arcosa Inc or generate 104.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Autohome ADR vs. Arcosa Inc
Performance |
| Timeline |
| Autohome ADR |
| Arcosa Inc |
Autohome and Arcosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Arcosa
The main advantage of trading using opposite Autohome and Arcosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Arcosa 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 Arcosa will offset losses from the drop in Arcosa's long position.| Autohome vs. Samsung Electronics Co | Autohome vs. Singapore Airlines Limited | Autohome vs. UET United Electronic | Autohome vs. KIMBALL ELECTRONICS |
| Arcosa vs. Lifeway Foods | Arcosa vs. INDOFOOD AGRI RES | Arcosa vs. JAPAN TOBACCO UNSPADR12 | Arcosa vs. GigaMedia |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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