Correlation Between Autohome and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Autohome and THRACE PLASTICS 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 THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autohome ADR and THRACE PLASTICS, you can compare the effects of market volatilities on Autohome and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autohome and THRACE PLASTICS.
Diversification Opportunities for Autohome and THRACE PLASTICS
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Autohome and THRACE is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Autohome ADR and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Autohome i.e., Autohome and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Autohome and THRACE PLASTICS
Assuming the 90 days trading horizon Autohome ADR is expected to under-perform the THRACE PLASTICS. In addition to that, Autohome is 1.37 times more volatile than THRACE PLASTICS. It trades about -0.06 of its total potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.26 per unit of volatility. If you would invest 368.00 in THRACE PLASTICS on September 1, 2024 and sell it today you would earn a total of 32.00 from holding THRACE PLASTICS or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autohome ADR vs. THRACE PLASTICS
Performance |
| Timeline |
| Autohome ADR |
| THRACE PLASTICS |
Autohome and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autohome and THRACE PLASTICS
The main advantage of trading using opposite Autohome and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autohome position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| Autohome vs. International Consolidated Airlines | Autohome vs. INTERSHOP Communications Aktiengesellschaft | Autohome vs. Ribbon Communications | Autohome vs. LION ONE METALS |
| THRACE PLASTICS vs. Harmony Gold Mining | THRACE PLASTICS vs. Coeur Mining | THRACE PLASTICS vs. MAVEN WIRELESS SWEDEN | THRACE PLASTICS vs. SLR Investment Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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