Correlation Between Autohome and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Autohome and GigaMedia 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 GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and GigaMedia, you can compare the effects of market volatilities on Autohome and GigaMedia 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 GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and GigaMedia.
Diversification Opportunities for Autohome and GigaMedia
Significant diversification
The 3 months correlation between Autohome and GigaMedia is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia 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 GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of Autohome i.e., Autohome and GigaMedia go up and down completely randomly.
Pair Corralation between Autohome and GigaMedia
Assuming the 90 days trading horizon Autohome ADR is expected to generate 2.4 times more return on investment than GigaMedia. However, Autohome is 2.4 times more volatile than GigaMedia. It trades about 0.14 of its potential returns per unit of risk. GigaMedia is currently generating about -0.04 per unit of risk. If you would invest 2,540 in Autohome ADR on December 8, 2024 and sell it today you would earn a total of 140.00 from holding Autohome ADR or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. GigaMedia
Performance |
| Timeline |
| Autohome ADR |
| GigaMedia |
Autohome and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and GigaMedia
The main advantage of trading using opposite Autohome and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| Autohome vs. Hyster Yale Materials Handling | ||
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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