Correlation Between Autohome and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Autohome and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and Treasury Wine Estates, you can compare the effects of market volatilities on Autohome and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and Treasury Wine.
Diversification Opportunities for Autohome and Treasury Wine
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autohome and Treasury is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Autohome i.e., Autohome and Treasury Wine go up and down completely randomly.
Pair Corralation between Autohome and Treasury Wine
Assuming the 90 days trading horizon Autohome ADR is expected to generate 1.41 times more return on investment than Treasury Wine. However, Autohome is 1.41 times more volatile than Treasury Wine Estates. It trades about 0.01 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.01 per unit of risk. If you would invest 2,866 in Autohome ADR on November 6, 2024 and sell it today you would lose (86.00) from holding Autohome ADR or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. Treasury Wine Estates
Performance |
| Timeline |
| Autohome ADR |
| Treasury Wine Estates |
Autohome and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and Treasury Wine
The main advantage of trading using opposite Autohome and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| Autohome vs. Alfa Financial Software | Autohome vs. MAGIC SOFTWARE ENTR | Autohome vs. PLAYWAY SA ZY 10 | Autohome vs. Playtech plc |
| Treasury Wine vs. Automatic Data Processing | Treasury Wine vs. MONEYSUPERMARKET | Treasury Wine vs. Northern Data AG | Treasury Wine vs. US FOODS HOLDING |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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