Correlation Between Autohome and Hongkong Land
Can any of the company-specific risk be diversified away by investing in both Autohome and Hongkong Land 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 Hongkong Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Hongkong Land Holdings, you can compare the effects of market volatilities on Autohome and Hongkong Land 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 Hongkong Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Hongkong Land.
Diversification Opportunities for Autohome and Hongkong Land
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autohome and Hongkong is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Hongkong Land Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongkong Land Holdings 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 Hongkong Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongkong Land Holdings has no effect on the direction of Autohome i.e., Autohome and Hongkong Land go up and down completely randomly.
Pair Corralation between Autohome and Hongkong Land
Assuming the 90 days trading horizon Autohome ADR is expected to generate 3.04 times more return on investment than Hongkong Land. However, Autohome is 3.04 times more volatile than Hongkong Land Holdings. It trades about 0.21 of its potential returns per unit of risk. Hongkong Land Holdings is currently generating about 0.01 per unit of risk. If you would invest 2,360 in Autohome ADR on November 3, 2024 and sell it today you would earn a total of 420.00 from holding Autohome ADR or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. Hongkong Land Holdings
Performance |
| Timeline |
| Autohome ADR |
| Hongkong Land Holdings |
Autohome and Hongkong Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Hongkong Land
The main advantage of trading using opposite Autohome and Hongkong Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Hongkong Land 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 Hongkong Land will offset losses from the drop in Hongkong Land's long position.| Autohome vs. Alphabet Class A | Autohome vs. Alphabet Class A | Autohome vs. Alphabet | Autohome vs. Meta Platforms |
| Hongkong Land vs. Elmos Semiconductor SE | Hongkong Land vs. BE Semiconductor Industries | Hongkong Land vs. Magnachip Semiconductor | Hongkong Land vs. Highlight Communications AG |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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